Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I believe Congress is delinquent in paying too little attention to the most significant set of public policy decisions now being made in this country: namely the decision by Chairman Alan Greenspan and the rest of the Federal Open Market Committee to increase interest rates because they believe that this country has been growing too fast economically, and that we must therefore cut back on growth and job creation so as to avoid any possible increase in inflation. I should note that they maintain this even though by their own admission there is no sign of inflation currently, and even though many of them, including Chairman Greenspan, have been unduly pessimistic in the past about the impact of reduced unemployment on inflation. Twenty-five of the twenty-six Democratic and Independent members of the Banking Committee have urged the chairman of the committee to convene a full committee hearing on the important issues raised by the Fed's decision. He has declined. I have now turned to my Republican colleagues to ask them to join in this request for a hearing. Under committee rules, if 4 of the 30 Republicans were to join us, we would have the requisite number to require that a hearing be held. It seems to many of us essential that we convene public hearings in the Congress in which Mr. Greenspan and his colleagues can defend their decision, and in which representatives of business, organized labor, citizens groups, and others can voice their agreement or disagreement. The scope of the issues involved here was recently made very clear in a cogent article Lester Thurow, former dean of the MIT Sloan School of Management, and currently a professor of economics at the school. Because this is the single most important set of decisions now being made about the American economy, and therefore about such related issues as how we can reduce the budget deficit to zero in a socially responsible way, how we can absorb hundreds of thousands of welfare recipients into the economy, and how we can accommodate growing internationalization of our economy without increased inequity. I am inserting Professor Thurow's article here: Alan Greenspan's move to higher interest rates in March was in and of itself unimportant--after all what can a one- quarter of 1 percent increase in interest rates do to an economy as big as that of the United States. The real issue isn't the increase but Greenspan's history. He believes in salami tactics. In 1994 and 1995 he raised interest rates 7 times in 12 months. Each increase was small, but in the end those 7 increases doubled interest rates. Based upon his history, financial markets know Greenspan does not like big jumps in interest rates and a small rate increase is apt to signal that a sequence of small increases has begun and that in the end those small increases will end up being a big jump in rates. Given this belief, it is not surprising the stock market started to fall in the aftermath of Greenspan's announcement. But the issues are far more important than the ups and downs of Wall Street. Greenspan has indirectly signaled he believes that the bottom two-thirds of the American work force should continue to get the small annual real wage reductions that they have gotten over the past quarter of a century--reductions that now amount to a 20 percent fall in real wages over the past 23 years. In the most recent year for which we have complete data, 1995, real wages once again fell for both fully employed male and female workers. Median family income rose slightly, but only because both men and women worked more hours per year. In a market economy, wages rise for only one reason--demand has to be rising faster than supply. In the past 16 years, a 2.6 percent growth rate has led to falling wages. If the economy continues on that pace, no one should expect anything different to occur in the future. Nothing has happened to change demand; nothing has happened to change supply. Yet this is precisely what Greenspan is suggesting should happen with this recent hike in interest rates. In his view the American economy must be limited to a 2 to 2\1/2\ percent rate of growth on the grounds that this is all the economy can achieve without rekindling inflation. In this environment, the pattern of falling wages for the bottom two thirds of the American work force has to continue. Americans cannot break out of this pattern without a different growth path. The bottom part of the American work force also needs to be reskilled and re-educated, but these programs cannot work without faster growth. With today's growth rate, real wages are falling for males at all edu- cational levels and for women at all educational levels except those with university degrees. With today's growth rates, there is no shortage of skilled workers. To increase the supply of skilled workers and do nothing about demand would simply reduce wages faster. If inflation were visible, perhaps one could justify drafting the bottom two thirds of the American work force to be ``Inflation fighters for the U.S. of A.'' It would not be fair (why should they suffer all of the costs of stopping inflation), but perhaps it might be necessary. But there is no sign of inflation in any of the indexes. Greenspan and the Fed can point to none--and they do not even try to do so. Greenspan has also testified to Congress that he believes the Boskin Commission is right and that today's price indexes include at least 1.1 percentage points of exaggeration. With this correction, the lack of inflation becomes even stronger. Nor is there any data showing that higher wages are about to lead to higher prices. The preliminary data for 1996 show a small gain in average real wages--0.2 percent--but 1996's productivity gain was five times as big. There is no economic theory under which such small wage gains far below the rate of growth of productivity can be labeled inflationary. Yet Greenspan is saying with his interest rate hike that those 1996 wage increases are too large. Only the modern Delphic Oracle, Greenspan and the Federal Reserve Board Open Market Committee, can see the inflation in our future. Only they can see why most Americans must prepare for a future of falling wages and diminishing expectations. Ordinary mortals who must rely on real world data cannot see what they see, but then we are only mortals--not gods. To put it bluntly and simply, such decisions ought to be unacceptable in a democracy. Decisions to lower the real wages for a majority of American voters must be decided in a democratic context. It is popular to talk about maintaining the independence of central bankers from the influence of politics, but that only makes sense if the central bankers are making sensible decisions that can be supported with hard real world data. When they ask us to believe them simply because they are wiser than we are and can see things that we cannot see, they are going beyond the appropriate bounds of any government agency in a democracy.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I yield to the gentleman from Michigan.

Mr. FRANK of Massachusetts. Mr. Chairman, let me say, I am about to yield to the senior ranking member, but I did want to alert Members that the vote is at 5 and the test on this for all Members will be given tomorrow morning.

Mr. FRANK of Massachusetts. I yield to the gentlewoman from California.

Mr. FRANK of Massachusetts. Mr. Chairman, let me respond now. First of all, I want to congratulate my friend from California. I did not realize he had such good intelligence sources, because he has been waving around a secret agreement. My reaction was to wonder, if it was a secret, where he got it. And I do not want to force him to reveal his sources, but apparently the gentleman from California has some tentacles into the intelligence networks of either America or Japan, because he is privy to secret agreements. Frankly I did not think it was that much of a secret, and the fact that the gentleman had it did not surprise me. But when he waved it around as a secret agreement, I was little bit puzzled. I just want to totally disagree with the conspiracy theory here. This is a difficult subject in some regards. People who have different economic interests may have different views. There is room for legitimate intellectual debate here. I and others have had some differences with the bill. H.R. 400 today is a different bill than it was before. There are some close questions. Some of the questions the gentleman from California [Mr. Campbell] raised about prior use, I had hoped to work with him further. But this is not some conspiracy. There was not a secret agreement signed in some tunnel in Tokyo. The gentleman from California is refuting me on a secret agreement by waving that secret around. I have to say, it is a pretty poor secret that falls into the hands of the gentleman from California. It is not a secret. There is a discussion of policy. We are making these changes. Some of us make changes in this bill without checking with anybody else. And the unwillingness to debate the issue on the merits but to invoke these kinds of conspiracy theories, I think ill-serves the policymaking process.

Mr. FRANK of Massachusetts. I yield to the gentleman from Virginia.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the requisite number of words.

Mr. FRANK of Massachusetts. I yield to the gentlewoman from California.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the requisite number of words. I note, I thought it was rather an odd orchestration when my friend from Ohio challenged anybody to stand up and respond, and her colleague from California then refused to allow anyone to do it. I think we should notice that there was a certain reason why no one stood up to respond. The gentlewoman from Ohio, she said, why does not someone respond? And the answer was, the gentleman from California would not let them. Mr. Chairman, I yield to the gentleman from Virginia [Mr. Goodlatte].

Mr. FRANK of Massachusetts. I yield to the gentlewoman from Ohio.

Mr. FRANK of Massachusetts. Mr. Chairman, reclaiming my time, this is very sneaky. Not only is the Commerce Department signing secret agreements, but they are then publicizing their secret agreements to throw people off the track of the fact that they had a secret agreement. I think that is an underhandedness that we ought to put an end to.

Mr. FRANK of Massachusetts. I yield to the gentlewoman from Ohio.

Mr. FRANK of Massachusetts. Mr. Chairman, I understand that. I realize the gentlewoman did not say that. That is why I did not say she said it. It was the gentleman from California. The gentleman from California has been waving this around talking about a secret agreement. My friend from California over here has just pointed out that this secret agreement was announced. I think we are entitled to point out that this was not such a big secret and that notion I will stress for this reason. Sure there is reason to debate this. I have agreed with some of the points Mr. Rohrabacher made, and I have supported some amendments to move it more in his direction, but to denounce it in these terms, to talk about secret agreements and to invoke conspiracies of people to be beholden to foreign powers to undermine American economics is just not a good idea.

Mr. FRANK of Massachusetts. Mr. Chairman, reclaiming my time, what we finally should do is to give credit to the literary hand that runs us all. Clearly this was motivated by the purloined letter, where the way to hide it was to leave it out in public, because, apparently, the Commerce Department stands accused of having signed a secret agreement to govern us all and then nefariously publishing that secret agreement to cover their tracks.

Mr. FRANK of Massachusetts. Yes, I deny it, Mr. Chairman. I will tell the gentlewoman this, I have been working on this bill. I was originally a cosponsor of Mr. Rohrabacher's bill. We made some changes. I have met with people in biotech. I have met with people in universities, big inventors and small inventors. I have proposed some changes. I did not even read the secret agreement. That agreement may not be a secret from a lot of people, but it was secret from me. So I absolutely deny that in my work on this bill, guided as it has been by conversations with Americans, that I was in fact the hidden puppet of the emperor of Japan.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I am appreciative of the efforts of my colleagues in taking out this special order and making it possible for us to reaffirm our absolute determination that the Armenian genocide will not go unnoticed. The world made a terrible mistake, with disastrous consequences, when it ignored the terrible crime committed by Turkey against the Armenian people 80 years and more ago. I continue to be baffled by the unwillingness of the current Turkish Government to acknowledge this horrible crime. I do not blame the current inhabitants of Turkey for the sins of their ancestors, but their refusal to acknowledge these terrible actions do them no credit. As do many of my colleagues, I greatly admire the fierce commitment of the current generation of Armenians to honor the memory of the innocent people who were slaughtered simply because they were Armenian. They do a great service for the world by not only commemorating their own ancestors, but by focusing world attention on the terrible consequences of allowing crimes like this to go unopposed and unnoticed. Remembering the Armenian genocide is both an important tribute to those who were slaughtered and one step in making sure that this does not happen again. general leave

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. No. I do not think the gentleman is interested in the conversation.

Mr. FRANK of Massachusetts. Mr. Chairman, that is the oddest invocation of the burden of proof I have heard. The burden of proof is somehow on those who would support one bill, but not on those who would support one equally important. The gentleman said the burden of proof is on one. As a matter of fact, what is clear to me from working with the universities is this: They had some objections. We have improved the bill from their standpoint to the point where they do not now object to it. They are not choosing between the two bills. But I would differ. At least with the universities I have talked to, there are elements in this bill, including, for instance, blocking the diversion of patent fees from the Patent Office, which makes them want some bill, and there are others who believe that some action in light of what is going on internationally is important. The key point is this: People who are the proponents of one position versus another should not come in and simply say, oh, the universities do not like your position, when they have a neutral position. I think some Members got the impression that they have taken sides.

Mr. FRANK of Massachusetts. Mr. Chairman, I ask unanimous consent to proceed for 2 additional minutes.

Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?

Mr. FRANK of Massachusetts. Mr. Chairman, I think we may be back in the Subcommittee on the Constitution of the Committee on the Judiciary, apparently. It sounds like some of my friends are about to create a third house of Congress, which is the universities, and only if they vote positively can we pass a bill. Mr. Chairman, I differ with the implicit imputation of great inarticulateness to the university sector. The gentleman from California says it is true they have said they do not support or oppose either bill. They do not oppose it. But the gentleman says that he infers from the fact that they do not support or oppose either bill the fact that they oppose any bill at all. In my experience, universities are not reticent. When universities have positions, they tell us. The fact that the universities have not said they were opposed to this would lead me to the conclusion, perhaps it is going out on a limb, but when the universities tell me they are not opposed to a bill, I infer they are not opposed to a bill. Perhaps there are subtleties unbeknownst to me. I worked with universities when they were opposed, and when they were they have said so. So we have made some changes, and they are not now opposed to this, they are neutral. It does not seem to me we have to absolutely do whatever they say, anyway. But neutrality is not opposition.

Mr. FRANK of Massachusetts. Mr. Chairman, I ask unanimous consent to proceed for an additional 30 seconds.

Mr. FRANK of Massachusetts. I thank my friend from Virginia for yielding. Mr. Chairman, the point is this. We are talking about a very, very limited circumstance. I think to some extent what we may be patenting-- and maybe you cannot patent this, maybe we would copyright it--examples of horrible and extremist that we can come up with that might possibly under certain circumstances create a problem. The gentleman from California has had one. Here is what I think he is positing. You apply for a patent. Your patent application is published. You subsequently decide that you are not going to get the patent, so you withdraw it and have you then lost your right to protect it under trade secrets? I do not think it would do any violence to the bill in that circumstance where no one had previously suggested to say that no, you would not lose that. I would be glad to do that. I would be glad to support an amendment in a subsequent part of the process that said if in fact the only thing that happened was that you were published and you were not going to get a patent, that that would not destroy your limited right of trade secrets. That one does not bother me at all. It is the first I had heard of it in all my conversations with the gentleman.

Mr. FRANK of Massachusetts. Yes, but I have never practiced. I did want to point out that my friend from California has just joined me in opposing the argument of the gentlewoman from Ohio, and I would say there may be an argument of his that she may not like, and I would be glad to have her join in on that one, too. The next point is that that is true, that we are not forced, except for this thing. There is an inconsistency in the gentleman's question.

Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?