Peter DeFazio

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Chairman, we have contained within the Interior appropriations from past years an embedded tax, a tax on the American people which was never authorized by the Committee on Resources or the Committee on Ways and Means, the two committees that would split jurisdiction over taxes or fees, if it is a fee on use of public land. Let us get one thing clear, the amendment being offered today does not affect user fees for national parks, for developed areas and campsites. But what it would say is that it is outrageous for the government, in a mish-mash, a plethora of programs, forest by forest, to have different reciprocities between forests, and I have one forest where they have two different passes, that they proliferate the new fee programs, forest by forest, charging people $25 a hit or $3 a day to drive to the end of a gravel road in a forest and go for a hike, or view the wildflowers, or go hunting or go rockhunting, rockhounding. These activities have traditionally been free. These are not activities which are drawing upon a capital-intensive developed site. Yet, with this so-called pilot program, unauthorized program, millions of Americans are now breaking the law. This year the Forest Service is going to begin seriously attempting to cite and prosecute people who park at distant, remote trailheads, trailheads that are often subject to car clouting and other problems. The Forest Service does not seem to be too much concerned about that, but they are going to be out there ticketing them for not having paid a fee. In many cases, you get to the end of a road, the sign is about 150 feet to the end of the road, and it says, to park here you need a pass, and you can obtain a pass 20 miles back that way at the nearest grocery store or other place which dispenses these passes. This is an inconvenience. It raises very little money. It is about 6 percent of the recreation budget. Surely this Congress does not need to double tax the American people and those who live on or near or recreate on these lands and charge them this new user fee, this new tax. We can find that other 6 percent to fund the recreation programs of the Forest Service. Further, we are adding a new slush fund to an agency that the GAO says they have one of the worst financial management and accounting systems, and now we have another new off-budget slush fund which is being used by each forest as they see fit, and as the Assistant Secretary admitted to me last night, with no supervision from Washington, D.C. So whatever fees they cook up for whatever project they want to do, whatever burden they want to put on the American people, they can do it with no oversight from Washington, D.C. or from the Congress under this unauthorized program. The committee itself says they are concerned about the management, accountability, and performance of the Forest Service. The accountability problems of the Forest Service are much more of a problem than just bad accounting. Far too much, with little congressional control and knowledge, has been transferred for administrative functions of the department. This program, this so-called pilot program, goes right to the heart of those concerns. The committee was talking about a different program at that point, C.V. fund, but guess what, they have just now created another one that is proliferating around the country, around the country, and putting an extraordinary burden on people. Take, say, the city of Oak Ridge, Oregon, in my district, totally surrounded by the Forest Service. If you just want to drive out of town and park on a gravel road and go hunting or go for a hike, you have to pay a user fee. For what? To use the gravel road which was built 25 years ago for logging, and is not maintained anymore? Or for beating through the brush? Why? Why should people pay for undeveloped sites on access to public lands? This has been a right that Americans have enjoyed for so many years, and it is very unfair to begin to assess a fee of $3 per hike or $25 per pass per forest, with very little reciprocity. On one forest in Oregon, the Deschutes, visitors to the Lavaland Visitors Center dropped off 40-percent in one year when this pilot project was put into effect. As was stated in an interview, the people at the visitors center said the people drive up, look at the sign, they turn around, they drive away; a 40-percent dropoff. Why? So they can buy a few more little gee- gaws for that visitors center, or make some other change on the forest? We should not be depriving Americans and their families of this opportunity. It is unfair. It is unauthorized. It should be stopped.

Mr. DeFAZIO. Mr. Chairman, I offer an amendment that is yellowed and crumbling for the length of time it has been sitting there.

Mr. DeFAZIO

Mr. DeFAZIO. Well, I am circulating a letter to all our colleagues this week asking them to sign on to the bill, which I will introduce when we return from the July 4 break. I think that certainly there will be many who will be interested in a progressive Social Security reform, a way to cut taxes for 95 percent of wage-earning Americans and assure the future of Social Security for generations to come. It sounds like a pretty good deal to me. And we will see if, for once, we can overcome the influence of those few wealthy people who spend so much financing the campaigns, particularly on the majority side of the aisle here.

Mr. DeFAZIO. Mr. Speaker, I would pause at something, but I do want to explain my plan, that that has something to do with the fact that if it were broken up into 70 to 80 million pieces that there would be an awful lot of commissions out there for brokers. And all the intense pressure here in Congress to break Social Security up and make it into individual accounts is coming from Wall Street, the same people of course who are contributing tremendous amounts of monies to people's campaigns. But let me explain a simple fix for Social Security. About half the American people pay more in Social Security taxes to the Federal Government than they do income taxes. We should deal with that issue. We should give them some tax relief. Now, we also want to make certain that the system is solvent for the future. So I put those two ideas together. If we did one thing, if we lifted the cap, right now if they earn $72,600 they pay Social Security on every penny they earn. If they earn $15,000, $20,000, $40,000, up to $72,600, Social Security on every penny they earn. If they earn a million dollars, they only pay Social Security on the first $72,600. That means their effective rate of tax is less than one percent; and it is over 6 percent for Social Security alone, not the Medicare portion, for individuals who earn $20,000 a year. So lift that cap. If we lift the cap and say fair is fair, everybody will pay the same amount on all they earn, that sounds like the flat tax that my colleagues over here are always pushing, then that would raise more than enough money to fix the system and make it solvent forever. But I want to take some of that money and invest it in tax relief. We could also exempt the first $4,000 of earnings for every wage-earning American. That means everybody who earns less than $72,600 a year, that is 95 percent of wage-earning Americans, would get a tax break under this proposal. And then with a few other changes in Social Security, investing some aggregate amount of the surplus, taking away from Congress which borrows it and spends it and replaces it with IOUs into index funds and other investments, we could ensure, and I have a letter from Social Security saying my plan would do this, the solvency of Social Security for 75 years, which is as far out as they project it, while providing tax relief for 95 percent of Americans. I also deal with two other problems. I give five child care dropout years so that the families that cannot afford child care or choose to stay home with their kids in their formative years will not be penalized in their ultimate Social Security benefits; and then finally, a slight increase in benefits for people over the age of 85 who are at a very high rate of poverty. We could do all that by lifting the cap on the wages. That is, everybody pays the same amount. But, unfortunately, I believe that a lot of people who are talking about financing campaigns are probably in that same category.

Mr. DeFAZIO. Mr. Speaker, the gentleman is making an excellent point there, and it is very disturbing to me and many other Members of this chamber. I believe the gentleman has probably signed what is called the discharge petition. That is, a majority of Members of this House if made to vote would vote for campaign finance reform, but the leaders of the Republican party are attempting to protect their Members from making that vote. In the last Congress, Speaker Gingrich managed to delay and delay and the gentleman from Texas (Mr. DeLay) managed to offer many, many, many mischievous amendments. But ultimately, finally, the House passed its judgment. As the gentleman says, overwhelmingly, faced with the obscenity of today's campaign finance system, an overwhelmingly majority of this House said we have to take these minimal steps towards reform. Our constituents demand it. But now here we are a little more than a year later, same place, a majority support reform, but we cannot get a bill to the floor of the House. The Speaker says, well, I will only bring it up later in the year, late enough so that we know it will not go anywhere in the Senate and then we will be launched into the presidential campaign year. And we all know that we are not going to reform campaign in the middle of the most expensive presidential campaign in the history of the United States.

Mr. DeFAZIO. Well, certainly, then, we can expect that we will take up campaign finance reform soon here on the floor of the House.

Mr. DeFAZIO. That is pretty radical. The gentleman sometimes is known to be out there a little bit. But I will take it back to a simpler prospect. A person who works 50 hours a week, say a retail clerk, and brings home $40,000, $50,000 a year in a good union job. That is possible. Let us not even go to the issue of someone with a very large income and someone with a modest income. Let us say two people earned $40,000 a year. One earns $40,000 a year by investing money they inherited, the other earns $40,000 a year by working 40 hours a week in a wage-earning job. The person who earns $40,000 a year is paying taxes at about the rate of 28 percent and the person who invests for a living is paying 18 percent. Now, I have a hard time understanding why that is fair; why the person who does not work for wages pays a lower rate. And, of course, if the person who works for wages is self-employed, not only do they get socked with a 28 percent rate, they also get socked with paying the FICA tax on both sides, so their tax rate suddenly jumps up around 40 to 50 percent. But their vision for the future is that 1 percent or so who can just live off investments should pay no taxes to the Federal Government. Now, my question would be how then are we going to maintain the government and who is going to pay?

Mr. DeFAZIO. Well, I am surprised we got back to campaign contributions, but I think the gentleman is making an excellent point. Again, the question is on behalf of whom does this body make policy day in and day out and to whom is the majority beholding? They are talking about a vision. They have a vision for a future, a tax system, which the gentleman was just talking about, and it is an interesting vision. And the vision is that we should do away with death taxes. Of course, in the last Congress we acted so that anyone with assets of less than $1 million in the very near future will be subject to no death taxes. But they are worried about those people with assets of over $1 million; that they might have to pay taxes upon transferring them to their heirs. So their vision is we would do away with all inheritance tax and then would reduce the capital gains tax to zero. Now, here is the ultimate absurdity, and this is not about wealth envy or something else, it is about everybody carrying their fair share of the burden in our society, and somewhat that depends upon the ability to pay. We can only squeeze so much out of a minimum wage worker. But if someone has a lot of discretionary income, they can afford to pay a little bit more. But in their vision that they have put forward to us, there will be zero inheritance tax and zero capital gains tax. Now, let us just say if someone was lucky enough to be, well, let's say Bill Gates' child, that person, and he says, by the way, that he is going to give most of the money away to charitable undertakings. And that is wonderful, and I think the American people will appreciate that gift. But let us just say he reserves a billion dollars for his child, and the child gets a billion dollars when they graduate from college. Well, under this vision of the future, that child would pay zero dollars on taxes for the inheritance. And if that child chose to invest the money for a living as opposed to working for wages, they would pay zero dollars in Federal taxes, zero dollars in FICA taxes. So it sort of begs the question, as the elite make more and more of their money off unearned income, why is it that wage-earning people have to pay 28 or 31 percent, or even the people at the top, 39.6 percent of their income in taxes, but these other people who do not have to work for wages, who are lucky enough or skillful enough to just live on unearned income, pay at the rate today of 18 percent with a vision of going to zero?

Mr. DeFAZIO. I have also recently found out, which causes me great concern in my district, that there is a problem with retired military getting their prescriptions filled. We have no active military base in Oregon, and they are not eligible for a mail order program which is maintained by the military, so what they have been doing is pooling together with volunteers to go up to Washington State with all their prescriptions, and then have a person go and fill a couple hundred prescriptions and load them in a van and drive them back down to Oregon. Now, this is another example of Americans who have been made a promise, in this case veterans, that we would take care of them; that we would take care of them for life, and now they are not getting their prescriptions filled. In fact, the military has proposed that they do not want to have this volunteer van service anymore. And I said, well, then, how about making these people eligible for mail order prescriptions? I have a Blue Cross/Blue Shield card, so I can get some product out of a pharmacy in Florida for an absurd price if I want to way wait a week or 10 days. So I said, how about the military setting up something like that. Well, that is difficult. We are still fighting over that. But that is just another category of people that are getting hit. They cannot afford to go to the pharmacy and buy these things. They have to get them through the military, and now they are being told they cannot do that.

Mr. DeFAZIO. Is the gentleman telling me these are exactly the same drugs? These must be generics or something like that.

Mr. DeFAZIO. Mr. Speaker, part of the problem there, I want to go back to the point about seniors and the cost of drugs. But just on the issue of access to health care and the fact that so many people have been deprived to access to health care, part of the problem is the fact that more and more Americans are working in temporary jobs. In fact, the number of Americans in the last 25 years holding temporary jobs without benefits instead of full-time jobs with benefits has gone up by a factor of eight, eight times as many people. The largest employer in America now is not General Motors. It is not Microsoft, it is a Manpower, Inc., a temporary employing employer. Now, those people are forced to take jobs, generally at wages lower than what they earned in their last full-time job, with no benefits, including no insurance benefit. Now, that is a crisis for many families in this country, and that is something that needs to be dealt with. They say, well, if they had insurance at their last job, they can purchase it under COBRA. That is right. We did provide relief for a few people with the Federal law that says they can purchase the same health care they had. But guess what? When people lose their jobs, most people cannot afford $350 a month premiums to come out of their unemployment insurance and still put food on the table, pay the rent, and pay the light bill. They cannot afford that. But talking about that, I have done recently, with the help of the gentleman from California (Mr. Waxman), a survey of seniors in my district in terms of the prices they are paying for commonly prescribed drugs for seniors. The results are absolutely extraordinary. I will be releasing the survey next week. But it turns out that many seniors are paying 4 to 7 times as much as people who have health insurance, full health insurance for exactly the same drugs over the counter. Now, there is something wrong with that. The insurance companies have gone to the pharmaceutical industry and bargained a good price. They are getting a great price. A senior walks in and buys the same prescription over the counter, sometimes they need essentially a life- saving prescription, and they pay 4 to 7 times more. They cannot afford it. The President is trying to deal with that in his proposal with a minimal beginning of prescription drug coverage. That would be an improvement over the current system. But much more can and should be done dealing with the prices these insurance companies charge. The gentleman from Vermont has tried for a number of years to make a very simple point, a lot of drugs are developed after the public has spent a lot of money developing the research for particular drugs. In fact, one drug that is very effective for uterine cancer was developed by the National Institutes of Health. All the research was done, all the processes on how to make it. The bark out of which the first drugs were made before they developed an artificial process came off of Federal land. So we have taxpayers pay to discover and develop the process for the drug. Taxpayers own the property from which the natural substance, the bark, is coming from. Guess what, the Federal Government gave an exclusive right to Bristol-Myers Squibb to market this drug with no price caps. Guess what? With no sunk costs, they did not go through a lengthy development process, and very low cost to get the product. They were charging outrageous prices because women desperate with this type of cancer needed the drug. Now, the gentleman has proposed a simple principle. They should repay the Treasury for that research. They should repay the taxpayers. Now, has that become law? It seems to me most Americans would agree that would be fair.

Mr. DeFAZIO. Mr. Speaker, since the gentleman from Vermont raised the insurance industry, some of our colleagues spoke at an earlier hour about the need for a Patients' Bill of Rights. As the gentleman pointed out, the insurance industry is the second greatest funder of congressional campaigns and has been particularly generous to the majority party. We found in the last Congress that we were able to get a very truncated Patients' Bill of Rights through the House, and the Senate did not act at all because of the fear on the part of the insurance companies that it might impinge upon their profits. Let us just talk for a minute about what that means. I have talked to some folks from the Heart Association who are very concerned. They spent years educating Americans to, when they have got that pain, they should go to the emergency room. Well, guess what, now with an HMO, one does not go to the emergency room, one is supposed to call the insurance company first in some plans and talk to a clerk somewhere who one may have awakened from their late evening nap, and ask them for permission to go to the emergency room. Sometimes it is denied. Take an aspirin and call the doctor in the morning. The Heart Association is very worried about the message we are sending here. So part of the Patients' Bill of Rights is called a prudent person rule. If one has got an extreme pain in one's chest and one thinks one is having a heart attack, one does not have to call a clerk who works for the insurance company to get permission to go to the emergency room. Of course, they say they do not deny permission, they just will not pay for it if one goes. Now, how many Americans can afford a $500 or $1,000 visit to the emergency room? Not very many. So this is extraordinary. So that is one thing in the Patients' Bill of Rights. There is another case in Virginia, a young woman who fell off a cliff, broke her back. They medivac'd her by helicopter. When she got to the hospital, they worked on her right away. She was in serious condition. Her insurance company later refused to pay because she lacked prior authorization. I asked, when was she supposed to make the call? On her cell phone as she fell through the air? Or perhaps she should have asked to use the radio in the helicopter while she was being medivac'd. No, these are absurd things. These are no brainers for the American people. We should have the right, we pay our insurance premiums, to have that kind of fair treatment. But guess what, the insurance industry does not think so, and a majority of my colleagues here in Congress do not think so, because they are much more attentive to the insurance industry then they are to the needs of their constituents. That is an outrage, and that should change. I am one of many who have signed a petition here in the House to force a Patients' Bill of Rights to the floor of the House because the Republican leadership refuses to let the bill be heard. We have over 180 people on that bill, and I tell my colleagues we will not be denied; and if the American people would begin to speak up to their representatives, they would not. But again, we are back in this circular situation where the people who fund the campaigns have more at risk and are more likely to be heard than the people who are being denied the care in their insurance plan.

Mr. DeFAZIO. If the gentleman will continue to yield, let us think about this again. If this unelected group, the Federal Reserve Board who meets in secret, some of whom work for banks and in fact can individually profit their employer without any conflict of interest rules, if they raise interest rates, and they did not raise them because wages are running away and people are seeing big increases in their wages, they must have had another reason. The pundits tell me that perhaps that other reason is that they are worried about the bubble in the stock market. I have a little problem about that. The question is, if you whack the people on Main Street by raising again, as these statistics show, their payment for their $100,000 mortgage, $15,000 car loan, and $2,000 credit card, and a lot of folks have more than that on their credit card, if they are going to pay $7,000 more for those loans because of this one-quarter of 1 percent increase, how is that going to somehow translate to a message to the people on Wall Street, the speculators, who are driving up, what did Greenspan call it, irrational exuberance on Wall Street? If he is worried about this irrational exuberance on Wall Street, why did he not do something about Wall Street? They have the tools. Right now on Wall Street with just a $1,000 investment, you can on margin go out and buy a whole bunch more stock. They could control that. There are steps they could take to directly control that. But no, they are going to whack the people on Main Street and say, see, we are going to cause some of you to lose your jobs, drive up unemployment, maybe we will drive down wages. We are going to cause this disruption in the economy, and we are hoping that will percolate up to Wall Street. This is kind of a bizarre way to run an economy, but I think it has something to do with who they work for, the major banks, and what lack of control the Congress has. No one knows what the Federal Reserve does or why they do it. It is all secret. Congress has ceded all authority to them in the making of money and controlling interest rates and basically managing the economy. They are managing it for their banker friends who are deathly afraid of inflation or deathly afraid of higher wages for the corporate CEOs, but not for average folks. I think that is an extraordinary turn of events. I think it brings us back again to who makes the contributions, who basically runs this organization when it comes to election time, and to whom are many of our colleagues beholden. It, unfortunately, is not the average people on Main Street, but it is those people on Wall Street. It is those people in the banking industry, the pharmaceutical industry, the insurance industry, and others. In fact, I noted today in the paper that, in this presidential race, George W. may not even take public matching funds because he has raised so much money and intends to raise so much money, obscene amounts of money is flowing in so fast, they cannot count it, that he just does not think he will need those public matching funds and those constraints on spending. Now, one has got to wonder who those people are contributing all that money and what they expect to get in return.

Mr. DeFAZIO. Yes. Just one point beyond that for people who are being stampeded into the idea that we have to destroy the system to save it. Even if Congress did nothing, as the gentleman says, for 35 years Social Security could deliver on 100 percent of promised benefits and after that 73 to 75 percent of promised benefits into the indefinite future. That means it has a 25-percent that starts 35 years from now. Does that sound like a system we need to destroy, the most successful social system this country has ever seen that has been responsible for lifting tens of millions of seniors out of poverty?

Mr. DeFAZIO. Mr. Speaker, following on that point, the question really is, for whose benefit is the country run and the economy run? If we ask, and I have asked, groups of students in my district, now, who do you think has the most impact on the economy in the United States in government, most people would guess the President. Some talk about the Secretary of the Treasury. A few guessed the Congress, the House and Senate. But virtually none say, well, Congressman, I know who it is, it is the Federal Reserve. It is that appointed, unelected, group of extraordinarily wealthy individuals, for the most part, who meet in secret. Today they met in secret downtown in Washington, D.C., in their marble palace, sitting at their exotic long boardroom table, marble, with nice exotic hardwoods, and they made a decision that I suppose does not sound that important to most people, but the impact will be tremendous. Again, it goes essentially to who really runs this country. They decided to raise interest rates by one-quarter of 1 percent. That does not sound like a lot, except there are tens of millions of Americans who tomorrow will wake up to find that their mortgage rate went up, their credit card rate went up, their adjustable car loan went up. In fact, it is computed that that one-quarter of 1 percent increase will cost a family money. Here is a family that has a $100,000 mortgage, a $15,000 4-year car loan, and $2,000 on a credit card. It sounds pretty middle class to me. It will cost them $6,913 for the mortgage, $84 on the car loan, and $16 on the credit card; $7,013, that one-quarter of 1 percent rate. I suppose that would be justified if there was a reason to do it. What is the reason? Are we worried about inflation, which is at or near historic lows? I do not think so. It might be that the Fed is worried about higher wages. The gentleman and I have talked about that previously. Sometimes the Federal Reserve gets worried when the unemployment rate drops below 5 or 6 percent. They had a rule for years saying it should not go below 6 percent. Then they said maybe 5 percent. They get worried, because what happens if unemployment drops?

Mr. DeFAZIO. Well, I was not even taking it that far, but that is an interesting point.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, at this very moment, the Federal Reserve is ensconced in their marble palace downtown meeting in secret, eating a catered breakfast off of fine china, all paid for by the taxpayer. They are deciding how high, how much, how often to raise interest rates to combat inflation that does not exist. They are about to raise the rates on credit cards for tens of millions of Americans, auto loans for tens of millions of Americans, mortgages for tens of millions of Americans? Why? Because they said they are worried about the stock bubble on Wall Street. But instead of using their awesome power to go directly at the speculators and the rampant speculation on Wall Street, they are going to take a whack at Main Street in the hope that the pain and the message exacted on average consumers filters up to the speculators on Wall Street. This is a bizarre new twist in economics. It is time to pull back the curtain of secrecy and reveal the profundity of the Federal Reserve working in the interests of the privileged few at the expense of the majority in this country.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, just to expand on the point of my colleague. I think it is a statistic the American people need to pay attention to. It is one-quarter of one percent. One-quarter of one percent of the people in America gave more than $200 to a political campaign last year and yet constituted 80 percent of the contributions. So who do we think are in the Republican leader's office when the decisions are being made on tax relief or reforming Social Security or on whether or not we are going to have HMO reform that gives patients rights? Guess what, the insurance company executives are in the office, not the patients, not the people who desperately need access to health care and cannot get it because their HMO is more interested in profits than in their health care. Guess who is in those offices when we are talking about tax reform? Now, we could do some tax reform around here that would benefit the majority of the working people in America. In fact, I have introduced some legislation to reform Social Security that would vouchsafe Social Security for 75 years, certified by the board of trustees, and it would give tax relief to 95 percent of the wage earning Americans in this country. It is simple. Right now we pay Social Security tax on the first $72,600 of income. After that, we do not pay Social Security tax. If we earn a million dollars a year, our tax rate under Social Security is less than one percent. If we earn $15,000 a year, our tax rate on Social Security, which is part of the FICA, is six percent. We make six times more out of a meager income on which we cannot make ends meet. So if we just lifted the cap and said, fair is fair, all these people want to talk about a flat tax, well, let us make Social Security a flat tax on all income, not a regressive, super-regressive flat tax which is only on the first $72,600 of income. That would vouchsafe Social Security into the indefinite future. But you can also use some of that money to give a $4,000 exemption from FICA tax. Forty percent or 45 percent of Americans pay more in taxes to Social Security than they pay in income taxes. Ninety-five percent of Americans would benefit under that system. Everybody who earned less than $76,000 a year would get a tax break. But guess what? The same people are sitting in the leaders of the office of the Committee on Ways and Means and the Republican leader's office when I talk about a progressive Social Security reform, something to make this vital program safe, and saying, ``You better worry about your campaign contributions here if you raise my taxes.'' They want to tax the little people, and they want tax relief at the top. It is time to change this system. But it is not going to change, as the gentleman from Vermont pointed out, until more people who have more on the line choose to vote, and that is the majority of the American people, who are losing under the current system. Often I give speeches like this on the floor and I have had colleagues and friends from the Republican side of the aisle say, ``You're talking about class warfare. We don't want class warfare around here.'' That is what they say. That is not the truth. What they want is they want to continue the current class warfare, which is winning warfare against middle-income and working families and the poor in America to the advantage of that one-half of 1 percent at the top. That is what they want to perpetuate. They do not want to talk about it. They do not want the truth out there. It goes to so many issues. It goes to Social Security reform. It could be progressive. It goes to trade. I hope the gentleman does not mind if I switch to trade for a moment.

Mr. DeFAZIO. Mr. Speaker, I thank the gentleman. In fact, I went before the Committee on Ways and Means. They would only accept bills that the actuaries had certified as meeting the 75-year requirement, so they only had testimony I believe on five pieces of legislation before the Committee on Ways and Means, and mine was one of the five certified by the trustees of Social Security. The chairman of that committee, who is also I believe for a flat tax, he did not just like latch on to it. I said, well, Mr. Chairman, this is going to be right down your alley; this is a flat tax. People are going to pay the same if they earn $1 million, if they earn $75,000 a year. Would that not be fair? And, we fix the system and we do not have to go through this whole disassembly and reassembly and rolling the dice and taking chances on whether something else would work, and whether the ``something else'' that they might put in place of Social Security, the system that is responsible for lifting millions of Americans, older Americans out of poverty, disabled Americans out of poverty, survivors of workers who died at a young age; we would lose or risk all that in the newly fractioned, independent sort of account kind of system. Yes, a few people would do better, but most would not. Here is an option that would provide tax relief and save the system, but it just somehow did not capture the chairman's attention right off. I do not intend to drop the idea. I have final legislation and I am ready to introduce it soon. I am hoping to begin a debate about a better way to fix social security.

Mr. DeFAZIO. Mr. Speaker, it is pretty simple. They are talking about destroying the system to save it; moving toward a privatized, sink-or- swim, on-your-own system, but there is one simple fact. If we just lifted the cap and said every American will pay the same amount of Social Security tax on all of their wages, that sounds pretty fair to me. It is not progressive, even. It is not. We are not saying low income people will pay less, we are saying everybody would pay the same amount on every dollar, and that would provide more than enough money to make Social Security solvent beyond the 75-year window. But I went a step further in my bill. I said okay, I like that, that is pretty good. We do not have to cut benefits, raise the retirement age or do things that hurt working people, and we do not have to roll the dice on some sort of individualized accounts, which have not worked out real well in Great Britain and in Chili, but what we could do also is exempt the first $4,000 of income. I would like to give a little tax relief. So the plan I have would lift the cap and use some of that money to provide tax relief by exempting the first $4,000 of income for self- employed and for wage-earning Americans who pay FICA taxes. Now, guess what that means? That means 95 percent of the people in the United States of America who work for wages would get a tax cut, and they would still collect their full Social Security. But 5 percent, those who earn over $76,600 a year, would pay the same amount as the other people who earn less than them. Now, would that not be a fairer way to fix Social Security?

Mr. DeFAZIO. Mr. Speaker, there are some policy issues at stake here. We talked about trade and we will not go back to that, but we could have a trade policy that helped in those areas. But the other issue is tax policy. The majority party here in the House very much wants to give a tax break to the American people, and the question becomes first off, are they going to give that tax break out of the Social Security surplus; that is a question and a problem; or, are they going to give a tax break by cutting programs like Pell grants and other things the gentleman talked about. But maybe it can be justified, but we can only justify it if we look and see where those tax benefits are going to flow. There are ways that we can provide substantial tax relief to the majority of the American people, but I fear, as in the last several tax bills since I have been here, the wealth and what they are talking about, the people at the top are going to do very well, and those average people are not. They want to reduce the capital gains tax again. Now, this is not quite clear to me, but let me see if I totally understand this. If I invest for a living, my effective tax rate is just slightly more than half of a retail check-out, unionized check-out clerk or a teacher, is that correct? A teacher is paying at 28 percent on the margin and if I do capital gains, I do not have them, so I do not know, but I think it is 18 or 19 percent, as I recall. So what are we saying to the American people? Is this like the Leona Helmsley theory of taxation, only the little people pay taxes? I mean they are talking about a world in which they would do away with the inheritance tax, and let us say we were lucky enough to be Bill Gates' kids. But he says he is going to give most of the money away and not to his kids. So maybe he only gives his kid $1 billion. So his kid only gets $1 billion. The rest, the other $89 billion goes to charity. That would be nice. But then the kid goes to college and vests that $1 billion and becomes an investor for a living. Does not work for wages. Guess what? That person would not pay any inheritance taxes under the brave new world of tax reform they are talking about, and would pay no income taxes, because they would exempt capital gains from income taxes. So the guy selling the burgers down on the corner, well, they are paying FICA tax, Social Security, they are paying income tax; they are subject to all of these taxes, but the person who inherited and invests for a living does not. What is wrong with this picture? If they want to talk about leveling the playing field, why should it be that people who invest for a living pay a lower rate of taxes than people who earn through blood, sweat and tears and time away from their home and their families, wages? Let us equalize the two. Why would we not do that? What is wrong with that idea? Would that not help most people?

Mr. DeFAZIO. Mr. Speaker, I have talked to a lot of people in Oregon and different places and I just remember one young man, I pulled into the gas station late one night after I flew back across the country, as I do almost every week, and he was kind of almost apologetic about it; he recognized me, and he said, I got to tell you, Congressman, I am not doing too good, I am not making it. And Oregon has the highest minimum wage in the United States, and guess what, our economy is booming, all the companies have not fled the State as we heard they would with the highest minimum wage in the country. But he said I have two jobs, my wife has a job, and he said, we are really not making it. We want to have a kid. We are not really sure we can afford to have a kid, because, he said, I have two minimum wage jobs at the Oregon minimum wage, the highest minimum wage in the United States; my wife has a minimum wage job, but after we pay the rent and the car payment and the other stuff, he said, there is not much left over. That is the unfortunate reality for many Americans. There have been a lot of jobs created, but compare the salaries and wages and benefits of those jobs. The largest employer in the United States of America now is not General Motors, it is not even Microsoft; it is something called Manpower, Inc., which is a temporary employment firm, with no benefits and, obviously, very little security and not the greatest wages in the world for most of the people they place. That is the largest employer in America. There is something wrong with that picture. It goes to trade policy, it goes to tax policy; it goes back to who funds the elections in this country. I mean there are a whole host of things contributing to this. It is very complex. It also goes to the Federal Reserve Board, who are a bunch of bankers who meet downtown at the largest, heaviest, most expensive marble and exotic hardwood table in the world, in secret, by the way, to determine monetary policy for the United States of America. And now, they are obsessed. They are obsessed. It is now, will a one-rate increase satisfy the Fed? What are they worried about? Another cartoon, I saw it. There are all these old guys, pretty much older guys, bankers and stuff, standing around behind Frankenstein, who is tied town, and Frankenstein's label is inflation, and one of them says, his eye lid twitched, his little toe moved, I think he is starting to breath. They are worried about inflation that does not exist; the lowest real rate of inflation in the last 50 years in the United States. Highest real interest rates, though, if we borrow money, and guess what? If there was a little bit more inflation, debtors, which is most of the people in America, the ones certainly I care the most about; everybody has a credit card, a mortgage, a home loan, a car loan, if inflation ticked up a half percent or 1 percent, guess what, you come out a little bit ahead, but your banker, your banker loses a little bit on the margin. So the obsession is we have to worry that wages might go up. The Fed is petrified, petrified that wages might go up. We have a law that says we are supposed to work to our full employment and keep down inflation. They do not look at the full employment side, and they particularly look negatively upon the idea of a real increase in wages. They do not want that to happen. And they are willing to drive up interest rates, which raises the credit card of virtually every American who has credit card debt, makes car loans more expensive, makes housing loans more expensive, because they are worried that the profits of the banks, that some of them who actually sit there and make policy in secret work for, might go down a little bit. There is a very strange system we are running here. What happened to the policymakers? What happened to the Congress? What happened to the President? Why can we not make monetary policy to drive up wages in this country, to create full employment? Why are those things anathema. Something is very wrong. Why can they make policy in secret? How can they do this?

Mr. DeFAZIO. Well, I understand it is not the policy of this Congress or this administration to interfere in those workings of the market, but as an individual Member of Congress and someone who is concerned about humanity worldwide, I kind of would like to see us take a stand there. I mean slave labor, prison labor, child labor; it seems to me these are sort of basic things that should be allowed and should be part of your trade policy. Project your values, and, yes, this is even more radical to talk about maybe looking toward the people at home and protecting their jobs. Now say, oh, well, you are talking about protectionism. I say no, I am just talking about leveling the playing field. Let us not have unfair competition. Let us not let American firms go south of the border and dump their pollutants out the back-door into the rivers in Mexico. Let us have them follow the same environmental laws there. Let us allow the Mexican people to organize and strike and not be bullied or even killed sometimes by their own government because they are trying to organize and help their wages. If we get level playing field, then workers all around the world will benefit, and I think these companies will ultimately do well too. They forget something: In America, in our country, we have kind of a compact. As the middle class grew, the companies did better because they could consume the goods. They seem to have forgotten that now because with families desperate more and more to make ends meet, they are becoming less and less capable.

Mr. DeFAZIO. Well, we just do need to expand on that point a little bit; as my colleagues know, the fact that these companies are chasing the lowest labor around the world and the least enforcement. As my colleagues know, actually I saw, not to be humorous about a serious subject, but I saw a cartoon once, and it was one a guy asked another, ``Why do you think it is we are spending all this money on NASA, National Aeronautics and Space Administration?'' And the other guy said; well, he says no because we know somewhere out there in the universe there are people who work for less than a dollar a day. As my colleague knows, I mean it is kind of a sad commentary, but unfortunately there is some truth in it. Under this guise of free trade American corporations are chasing around the world, and multinational corporations, after the cheapest labor from the most desperate people or from children, as we have seen in many countries where children are exploited in horrible conditions as young as age 7 and 8 in some countries, basically indentured into their jobs, deprived of an education or any opportunity to get ahead, to make products that are marketed in the United States and other developed countries. And trade law does not allow us to prohibit those goods from coming into our country.

Mr. DeFAZIO

Mr. DeFAZIO. Mr. Speaker, one of my constituents, Margaret Ingram of Albany, Oregon, has made it a personal crusade to encourage people to keep journals and otherwise record the events of their lives. The following bill was introduced in the Oregon Legislature at Ms. Ingram's request. In honor of her efforts and to advance the pursuit of journal and diary-keeping, I would like to insert the text of that resolution in the Congressional Record.