Barney Frank

Mr. FRANK of Massachusetts

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

Mr. FRANK of Massachusetts. I would also say I was a little bit surprised to hear my friend from California worried so much about the rights of people under trade secrets because I had previously in my conversations with him and in his amendment understood him to be somewhat critical of the trade secrets doctrine and to be interested in narrowing it substantially.

Mr. FRANK of Massachusetts. Mr. Chairman, I would think we could state this very clearly. No, the universities are not supporting the committee bill, they are not supporting the bill of the gentleman from California. He is being unusually reticent. My friend from California is being unusually reticent in leaving his own bill out of this conversation. He is not ordinarily so modest about it. I have worked with the universities, with Harvard, and MIT and some others. My understanding of their position is that while they were originally opposed to H.R. 400, the changes we have made have brought them to a position of neutrality as between the two bills. I do believe they want to see a bill passed, but the fact is it seems rather odd for the proponents of one bill to be citing the universities' neutrality when the universities are neutral as between the two bills.

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

Mr. FRANK of Massachusetts. Mr. Chairman, my understanding is that the trade secret is what we invoke as an alternative to patent. The gentleman said if we file and are published, we lose our right to go for trade secrets. But my understanding is if we go the patent route, that is the alternative to trade secrets. So, therefore, yes, if we decide to get a patent, then we have given up our right to go the trade secret route.

Mr. FRANK of Massachusetts. Well, Mr. Chairman, first of all, let me say I welcome the support of the gentleman from California of my argument against the gentlewoman from Ohio. Because he just said he did not like her argument, and I appreciate that. I know they are friends in general, but I should like to point out that the gentleman from California----

Mr. FRANK of Massachusetts. On these issues. I get worked up on some others.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word, although I might want to put it back by the time I am through. I rise in support of the manager's amendment of the bill. I am the ranking minority member of the relevant subcommittee, so I have immersed myself to some extent in this. I have had some of my colleagues say to me that they do not quite understand why there is all this passion about the bill, and I will say to those who are looking to me for enlightenment on this that they will go unenlightened. I think there is a dynamic of rhetoric that keeps arguments going even when they are not necessarily there anymore. There has been some convergence here. Originally, I was a cosponsor with the gentleman from California [Mr. Rohrabacher]. I had heard from the biotechnology people that they did not like the alternative. That was several years ago. In the interim, the bills have become less different. I do not expect the entrenched partisans on either side to acknowledge that, but it does seem to me we may want to look at it. In fact, the manager's amendment that came forward further bridges the difference, further reduces the problem of publication. One point that should be made clear, and I say this because not every Member is fully familiar with it, and some Members were puzzled by publication, people should understand that we do not lose any legal right by publication. There are some people who think it will be published before I have my patent and then I am not protected. No, that is not true. There is absolutely no diminution of legal right. What people are arguing is that the practical situation in which we are put to defend our legal right might be more difficult. But understand that there is no diminution of our legal right.

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

Mr. FRANK of Massachusetts. Mr. Chairman, reclaiming my time, I think the general rule is sentence-yield, sentence-yield. So now it is time for a sentence, and then I will yield again after I get to say a sentence. The sentence is, and it is actually a couple: We made another change in this. Under prior law, if two people both filed a similar patent, they were on equal terms before the law and had an equal burden in terms of proving who had invented first, not who filed first, which is not relevant. We added to the bill after the bill was filed and added language that says, if we have published and someone files subsequent to our publication, we are no longer on an equal footing. We are now in a super-legal position. The person who filed subsequent to us has the burden of proof. We will indeed, in fact, almost assume that the person copied our patent from the publication. And that is a very important difference. It is true under old law we could file, somebody else could file, we would publish, someone else would file, and we would be at greater risk. We have further strengthened the hand of the person who files and is subject to publication.

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

Mr. FRANK of Massachusetts. Mr. Chairman, reclaiming my time, I say to the gentlewoman she has made her point and I want both to affirm it and then respond to it. That is what I meant before. The legal right is not diminished. The gentlewoman is not contesting that. We have the same legal right whether or not there has been publication. The argument has been that those who want to intrude on our patent will do so, and if we are not a person with a lawyer, then we are at a disadvantage.

Mr. FRANK of Massachusetts. That is also true once we have gotten a patent, Mr. Chairman. In other words, if there are people out there who are determined to use their superior resources and their access to lawyers to infringe on and chip away at and take the benefit from our patent, they can do that whether it has been published or not once it is patented. Yes, anybody in this society, I guess, who might be in difficulty is at more of a disadvantage if they do not have a lawyer handy than if they do. There might be other cases when people might consider it a disadvantage to be too near a lawyer, but in the case of a dispute, it is probably helpful. But that is true whether the patent is issued or not, whether or not there are people out there after us. The point I would make is that publication, particularly with the safeguards we have, does not weaken either our legal position nor the disadvantage we might be at because of a lack of access to attorneys.

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

Mr. FRANK of Massachusetts. Mr. Chairman, reclaiming my time, maybe the gentleman misunderstood me, and I will clarify it. The question was, if we are published, do we give up our ability to use trade secrets. My answer was, if that was the question, the answer is that any time we go for a patent, we give up the right to go trade secrets. I want to finish the one question which was, is there a conflict between trade secrets and publication? My understanding, as I said, is that applying for a patent is an alternative to trade secret. If that was not the question, rather than claiming I answered ``Yes,'' the gentleman ought to rephrase the question.

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

Mr. FRANK of Massachusetts. I tried to respond to the gentleman. He then frankly, it seemed to me, somewhat distorted what I said. I am not going to simply allow that to happen, so I want to restate it. If the question was, does publication take away your right to do trade secret, I would have to say I am surprised at the question, because any patent takes away your chance to use trade secret. Publication is not the operational problem there, it is the desire to ask for a patent.

Mr. FRANK of Massachusetts. I yield again to the gentleman from California.

Mr. FRANK of Massachusetts. I would say this to the gentleman. That is a circumstance I had not previously thought about. In other words, what the gentleman is saying is you decide you are not going to get the patent and you withdraw it. I would be prepared to work on an amendment, which I suspect would make no difference to the gentleman overall.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, reclaiming my time, let me be clear. The gentleman did not mean, and I apologize to the gentleman, I will not in the future confuse what he says with what he believes, if that is what I am supposed to interpret. It did seem to me like he was saying we will let the President do that one. In fact, however, the point is still valid. This amendment does not deal with the Internal Revenue Code, big ``I'', big ``R'', big ``C''. It says the generic, the internal revenue of the United States. And cutting the CPI would increase the internal revenue of the United States, and it would clearly require a two-thirds vote. The point is it should not require a two-thirds vote. Democracy should be allowed to function. Today there is not a majority in this country for raising taxes. There might be a majority for reducing taxes. Suppose 10 years from now there is a different majority. Suppose 10 years from now people have changed their views? We have had economic growth; they want to deal more fully with certain things. They, in fact, decide they have to get that debt down and they would be willing to vote a tax increase dedicated to reducing the national debt. That ought to be a decision that the majority of the American people could take if they want to, and this is one more obstacle that we are trying to put in the way, those who support this, in the path of a majority. The majority today ought to do what it thinks is right. If it wants to reduce taxes, it should reduce taxes. If it wants to keep them the same, it should keep them the same. If it wants to cut spending, it should cut spending, although the majority apparently does not want to do that, because that would require a budget that requires tough political discussions, and they want to avoid those. But what we should not do is to say, because we have a majority today, we will change the basic rules so that 10 years from now, if a new majority said things have been pretty good economically and we could afford a tax increase to reduce the deficit, we should not require that to take two-thirds.

Mr. FRANK of Massachusetts. Mr. Speaker, I could not help but notice the somewhat pained look on the face of my friend from Florida, when the Chair told him he had 49 minutes remaining. Time goes quickly when you are having fun, I would have to say to the enthusiastic advocate of this constitutional amendment. Mr. Speaker, we should note that today is the day when under the law of the country, the Republican majority should be giving us their budget. We have no budget. They do not want to present the budget, and what we have today is a diversion, a proposal that is not taken seriously by all but a handful on the other side, that no one thinks is going to go anywhere, and it is an effort to divert people's attention from the fact that they have failed their legislative responsibility to bring forward a budget. The problem is not for them that it is too easy to raise taxes. It is that for all of their rhetoric, it is too hard to cut spending. The gentleman from Texas, the author of the amendment, said if this amendment had been in effect we would have $666 billion less in revenue. Well, I assume when those who advocate this amendment would show us how they could cut $666 billion a year out of spending. But they will not; they will not even try. What we have is the emptiest rhetoric imaginable, all of this breast beating about cutting spending but not a nickel cut. Where is their budget? If, in fact, they believe that we have overtaxed and that the remedy is to reduce spending, why have they failed their statutory responsibility to bring forward a budget? What happened was a few years ago, a year and a half ago, 1995, the Republican majority found out that there is a great inconsistency between their talk about reducing spending in general and their interest in reelection in particular. The public did not like it when they shutdown the Government. They are not prepared to live up to the rhetoric. They are not prepared in fact to propose those spending reductions. So we sit around here waiting, I guess, for heaven-sent spending reductions. We go pass the time when we are supposed to do the budget, and they talk about a tax limitation amendment. There are a couple of problems with the amendment on its own terms. In the first place, with this amendment, we have to be very careful because every time we turn around it is a new form. The fact is, it is very difficult to put into the Constitution legislation of this sort. Defining taxes for this purpose is difficult. Last week they got through the Committee on the Judiciary a version of this that they did not notice until we pointed it out to them apparently would have required a two-thirds vote to cut the capital gains tax. Because under their view, cutting the capital gains tax increases revenue, and their amendment was worded so we would have needed a two-thirds vote to cut the capital gains tax. We pointed that out to them so we have a new version of the amendment which takes care of that. But there are other problems. There are Members who have argued that one thing we should do to balance the budget is to cut back on the Consumer Price Index and what it triggers. I am not in favor of that as a whole; some Members are. But I understand this: The Consumer Price Index controls tax brackets. The Consumer Price Index determines tax bracketing. If we were to reduce the Consumer Price Index, as the Boskin Commission recommended, we would be increasing tax revenues because we would be changing the bracketing in a way that brought in more revenue. So if this constitutional amendment were part of the Constitution, it would then take two-thirds to reduce the CPI. Now, if we had another version of this coming up they would probably change it to do that. The problem is, we cannot put into the Constitution this sort of procedure. But there is a more profound problem. This bespeaks a majority that does not trust the American public. This bespeaks Members who do not think they can get a majority.

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

Mr. FRANK of Massachusetts. Mr. Speaker, it is interesting to have the advocate that says you need a two-thirds vote of the Congress to raise taxes say he wishes it could be done instead by Executive order, because understand, first of all, that changing the CPI the way the Boskin Commission said would increase taxes. It would increase the rate of taxation on people because of what it would do with the brackets. The gentleman from Texas, not surprisingly, said I do not want to do that; let the President do that by executive order. So on the one hand he wants it to be a two-thirds vote, and on the other hand he wants the President to do it by Executive order. He may not have read the most recent version of his amendment, because it does not say the Internal Revenue Code. It quite specifically, as we were told in the Committee on the Judiciary, does not say the Internal Revenue Code, it says the internal revenue of the United States, small ``i'' small ``r''. So when the gentleman says this does not affect the Internal Revenue Code, that is wrong. Finally, the CPI does directly affect the brackets. If we reduce the CPI, then we reduce the indexation of brackets and the result is higher revenues.

Mr. FRANK of Massachusetts. Mr. Speaker, I will be glad to yield to the gentleman from Texas if he wants to appeal to the President to get him out of this one again.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I have voiced my strong disagreement with the recent decision by the Federal Reserve to raise interest rates on the floor of the House. Recently I saw an article in the April 21 issue of The New Republic which makes the case in a cogent way that Mr. Greenspan was mistaken, and that his mistake will be damaging to our economy. Similarly, the Economic Scene column by Peter Passell in the April 10 issue of the New York Times does a good job describing the downside of the Fed's decision to clamp down on economic growth. I am inserting both articles here: [From the New Republic, Apr. 21, 1997] Fed Accompli Last week the Federal Reserve ended a five-year experiment: How many people can the nation put to work without triggering inflation? The results are fiercely contested, their ramifications enormous. Everybody wants unemployment to be as low as possible, but nobody knows for sure how low that is. Growth optimists believe unemployment can fall much lower than the current 5.3 percent without fueling inflation. Inflation hawks, led by Fed Chairman Alan Greenspan, don't. But the debate is academic, because monetary policy isn't set by public debates and majority votes, it's set by Alan Greenspan. And Greenspan is sure that the current high levels of economic growth and employment will soon cause a spiral of higher prices. So he raised interest rates last week and appears likely to do so again, effectively ensuring that unemployment will not drop any lower than it is today. Given the data of the last two years, data that, despite endless scrutiny, shows not the slightest hint of creeping inflation, we wish the chairman were a little less certain. Both Greenspan and his critics agree that prices hinge upon a balance of power between employers and employees. When joblessness drops, the value of labor rises. Employers raise salaries and pass the cost on to consumers. These higher prices cause other workers to demand raises. Such an inflationary spiral can only be stopped if the Federal Reserve slows the economy, making everybody worse off. The big question is how low unemployment can drop before an inflationary spiral begins. Conventional economists have long held that inflation would start to mount if unemployment fell below 6 percent. But the current economic expansion, which began in 1992, has brought unemployment down to 5.3 percent without a trace of rising inflation. For inflation hawks like Greenspan, this state of affairs can't go on. The growth optimists, with varying levels of plausibility, suggest another story. They believe the economy has entered a new era, capable of sustaining lower unemployment than before. Why have the rules changed? There are several reasons: Globalization. International competition makes it harder for American companies to raise the cost of their goods, lest foreign firms undercut them. It has also made workers less secure about their future and hence more timid in demanding raises. (Polls of employee confidence support this notion.) Computers have increased productivity. This is the pivotal point. Productivity ultimately determines wages. If wages are rising just because employees have more leverage, then the boss has to raise prices. But if workers are producing more, then employers can pay for a wage increase out of profits instead of passing the cost on to consumers. The latter scenario seems to be the case. Productivity rose 1.5 percent last year, while real wages rose by just 0.6 percent. The share of the economy going to corporate profits is up a full percentage point from the peak of the last business cycle. This suggests that firms can pay their employees more without hiking prices. Bad statistics. Most (though not all) economists believe the government has been overestimating inflation for years. That means we have less to worry about than Greenspan thinks. (Greenspan, interestingly, adheres to this theory himself, although he has of yet failed to reconcile it with his inflationary paranoia.) Hard data to support the new era hypotheses remains sketchy. So far, however, the story checks out. And, even if it's wrong, failure entails nothing more than slightly higher prices and a future interest rate hike. At its current level, inflation appears unlikely to spiral out of control. A little inflation hurts, of course, but it doesn't really start to bite until it hits the mid-to-upper single digits. As MIT economist Paul Krugman wrote recently in The Economist, ``3 percent inflation does much less than one-third as much harm as 9 percent. One other recent even has strengthened the case for experimentation: welfare reform. If the government demands that all citizens who can work do work, it cannot simultaneously enforce Greenspan's explicitly anti-employment program. Or, at least, it should not do so without first attempting an alternative. The alternative--an effort to see whether we can successfully push unemployment below 5 percent, and perhaps improve the lives of millions in the American underclass in the process--may prove a pipe dream. But the benefits of success outweigh the costs of failure. And we'll never know unless the Federal Reserve chairman opens himself to the possibility that he is wrong. [From the New York Times, Apr. 10, 1997] (By Peter Passell) The latest labor market numbers have been widely greeted as fresh evidence that the Federal Reserve chairman, Alan Greenspan, has a direct line to the Oracle of Delphi. With data suggesting that the demand for workers is growing more rapidly than the working-age population, the Fed's pre- emptive strike against inflation last month seems to be one more sign that the Fed remains ahead of the game. But not quite everyone is convinced that Mr. Greenspan's latest prognostication--or for that matter, the unbroken economic expansion since 1991--proves that he has all the answers. For while a recession-free six years may have marginalized his critics, it has not really established that the Fed has found a golden mean between stable prices and economic growth. For that exquisite balance, if it exists at all, depends as much on value judgments as technocratic insight. ``Where was it written,'' asks Robert M. Solow of M.I.T., a Nobel laureate in economics, ``that absolute security against inflation is worth sacrificing unknown quantities of national income?'' Moreover, this seems a particularly unfortunate moment to choose to err on the side of fighting inflation at the expense of higher unemployment--and without even a whimper of debate. To make welfare reform work, there have to be jobs for those pushed off the rolls. Yet without tight labor markets, business will have little incentive to invest in the training needed to bring marginally competent workers into the mainstream. No one disputes that Admiral Greenspan has kept the economy on an even keel since the recession of 1990-91. His performance seems all the more impressive when compared with that of German, French and Japanese policy makers, who have not been able to spring their economies from the doldrums. Today, unemployment is at 5.2 percent and the economy is growing at an annual rate well above 3 percent. Indeed, even his critics are quick to praise Mr. Greenspan for flexibility in recent years, keeping interest rates steady as unemployment dipped below the level experience suggested would fuel wage-led inflation. ``He deserves a lot of credit'' for holding the line long after traditional conservatives were calling for a tougher stance, argues James Tobin of Yale, another Nobel laureate. By the same token, most economists see the quarter-point interest rate increase last month as a sign of Mr. Greenspan's enlightened pragmatism and the best way to avoid a future recession brought on by painfully high interest rates. ``By tightening a little now,'' suggests William Dudley of Goldman, Sachs, ``he makes it less likely he'll have to tighten a lot later.'' So what's left to argue about? Plenty. Mr. Tobin says that inflation is simply not a clear and present danger. A close reading of other bellwether statistics--notably the proportion of the newly unemployed who were dismissed and the index of labor demand based on help-wanted ads--is surprisingly benign. ``The risks of inflation seem no greater today,'' he concludes, ``than when unemployment was up at 6 percent.'' For his part, Mr. Solow is unconvinced by the conventional wisdom that gradualism works best. Small increases in interest rates early on--the pre-emptive strike--may seem less traumatic. But by Mr. Solow's reading of the evidence, larger increases once signs of inflation are unambiguous are no more likely to generate overcorrections. Economists are comfortable staying within the confines of this purely technical debate. A Greenspan-worshiping majority believes that unemployment is already below the rate that can be sustained without bringing on inflation, or that the economy's momentum will soon bring the rate into the inflationary range. An embattled minority suspects that fundamental changes in the economy--globalization, de- unionization, downsizing--have sharply lowered the level of unemployment that is compatible with stable prices. But the debate can be confined only to the technical by ignoring its social dimension. No one really knows whether the magic ``nonaccelerating inflation rate of unemployment'' is 5.5 percent or 4.5 percent. So decisions about the target implicitly have as much to do with how one weighs the consequences of erring on the side of slow growth against the costs of inflation. Fear of inflation has been an easy sell since the trauma of the oil shocks in the 1970's. Uncertainty about prices leads to economic inefficiency--and, horror of horrors, lower stock prices. Besides, inflation breeds recessions because it eventually brings down the wrath of the monetary gods. But not to belabor the obvious, living with 5.2 percent unemployment if the economy is able to sustain 4.5 percent also has costs: every tenth of a percentage point represents at least 130,000 jobs. It may be tidier to leave monetary policy in the hands of a benign despot. But it's also a little sad: if the 5 percent unemployment barrier cannot be tested when inflation is beyond the horizon and a Democrat is in the White House, when can it?