Phil Gramm

Mr. GRAMM

Mr. GRAMM. I want to be quick because I know our dear colleague is waiting. When the Senator talked about the minimum, he may have misplaced a decimal point. Under this bill, the minimum loan is $25 million for steel.

Mr. GRAMM. Will the Senator yield?

Mr. GRAMM. Mr. President, let me try to explain why I look at the steel problem and see it so differently than our dear colleague from West Virginia. First of all, let me just review the facts that nobody disputes. In 1980, we had 459,000 Americans who were employed in the steel industry. Today, we have 163,000 Americans employed in producing steel. So employment between 1980 and 1997 declined from 459,000 to 163,000 people. If you just looked at that number, you would say, well, domestic steel production must be just falling completely through the floor; that we must have a disaster in the domestic steel industry. The plain truth is that while employment fell from 459,000 steelworkers to 163,000 steelworkers, the production of steel in the United States actually went up by 56 percent. In fact, on average, since 1980 we have seen about a 9,000-job-a-year decline in the number of people working in steel production. Because of technological change, we are using fewer workers to produce more steel. The complaint that is being lodged where it is being demanded first this week that we have the government guarantee loans to the steel industry and then next week where we impose a quota on steel imports triggering a trade war--remember, we have 40 people using steel in jobs for every one person making steel--all of that legislative effort is due to a belief that we lost 10,000 jobs this year in the steel industry. We have lost 9,000 a year every year since 1980. One of the reasons, despite all of this talk about the rush of imports and unfair trade practices, that the steel industry has never filed a section 201 claim is in part because of an inability to demonstrate that the problem is imports. In fact, in 1997 when we had the surge in imports, we had the largest domestic steel production in American history. In fact, in 1997 we produced 105 million tons of raw steel, which is an all-time record in steel production. Why did imports surge in 1997 when domestic production was at an all- time high, where in fact some analysts believe that we had overcapacity utilization in 1997? What happened was the economy was exploding, for which we all rejoice. We were creating 7,500 jobs a day, which still continues to this day. Thank God. As a result, people are buying cars at record rates, people are building houses at record rates, and we are approaching 70 percent of Americans who own their own homes. They are buying refrigerators, washing machines, and dryers. All of those products use steel. We had a record level of domestic production and a record level of demand. What happened? We imported steel to fill the gap. I think it is also important to note that in 1998, the last year where we have records, production was still near an all-time record with 102 million tons. In fact, the steel industry earned profits in 1998 of $1.4 billion. I am not complaining about that. If I could snap my fingers and make those profits $10 billion or $14 billion, I would do it --or $140 billion. I don't have any objection to profits. But the point I want to make is that in this period where the argument is being made that steel is collapsing and that we are being drowned by imports, other than on wire rod, no steel company in America filed a 201 complaint about imports producing a loss of business for them, or costing jobs in their industry. When they don't file the 201 complaint, it suggests that they didn't have a case. Here is the point I am making: 9,000 jobs a year have been eliminated because of technological change where production has grown by 56 percent. We are having the greatest economic boom in American history. We are creating 7,500 jobs a day. We have towns, and I'm very grateful that my hometown is one of them, where university students go after class to have a beer, and they have impressment gangs who come around and try to drag them off to factories. We are creating 7,500 jobs a day. In the name of 10,000 jobs that were probably lost because of technological change, we are being called upon to go back to the 1970s, to the policy of Jimmy Carter, and have the Government start lending money where we are guaranteed in advance we will lose $270 million on the loans upfront. Of course, the default when Jimmy Carter was President was 77 percent. If we had that kind of default rate, the loss would be many times the $270 million. We are creating more jobs in a day and a quarter than we are talking about, and we are jeopardizing those jobs by getting Government in exactly the kind of situation we are begging the Japanese to get out of: Getting America into crony capitalism, where we are trying to institute industrial policy, where Government is making decisions instead of the credit markets. Second, we are getting ready next week under exactly the same heading to debate a provision that would literally start a trade war which could destroy millions of American jobs when there is not hard evidence these jobs have been lost because of imports. Finally, as if all that were not enough, if the problem really existed, it has already been solved. American imports of steel have declined 28 percent since November of 1998. Russian imported steel is down by 96.6 percent; Japanese steel is down by 74.4 percent; Brazilian imports are down by 24.4 percent; and Korean imports are down by 46.8 percent. Imports from all countries are down dramatically. Even if this was a problem, as normally happens in these political debates, we are a year late. I am sympathetic to this problem. I am very sympathetic because my State is affected by these problems. The point is, we are not going to fix these problems by having the Government come in and lend money to an industry as it did when Jimmy Carter was President. Some people said the other day that when Jimmy Carter was President, we had to do it because the inflation rate was in double digits and interest rates were at 21\1/2\ percent. That is true. But were inflation rates in double digits and interest rates 21\1/2\ percent because we had Government trying to run the economy? Isn't that what we changed in the 1980 election? I don't want to go back to the policies of the Carter administration. This is 1999. That is why I am not for this provision. It is not because I'm not sympathetic to someone who lost a job in the steel industry. If that job was lost due to technological change--and the evidence is pretty overwhelming that it was--do we benefit anybody by lending money when we know that a substantial default on the loans will occur? It seems to me what we need to be doing is to try to promote economic growth where people can find jobs and, hopefully, better jobs than they lost. When you have technological change in one industry that eliminates jobs and you have new technology in others, that creates jobs. This is a tough issue. It is always easy and, I think, always tempting to try to say if anybody in America loses a job for whatever reason that the Government ought to do something about it. I remind my colleagues that in a day and a quarter we create more jobs in the private sector of the economy with the economic policies of open trade and private capital allocation and basic free enterprise; we are creating more jobs in a day and a quarter than anyone is claiming that steel has lost in the last year. We have to weigh this point. Isn't it distinctly possible under those circumstances that we could lose more jobs by starting a trade war or getting Government into industrial policy than we will save by doing those two things? Then those jobs might be lost anyway as a result of continued technological change. It is because I am concerned about working Americans, it is because I am concerned about keeping this recovery going, it is because I want to keep creating 7,500 jobs a day that I am not for these loan guarantees. I yield the floor.

Mr. GRAMM. I am happy to yield.

Mr. GRAMM. Mr. President, I first say to our colleagues that Senator Nickles and I, who are on the other side of this issue, have been at the Finance Committee where we have been holding a hearing on Larry Summers, who has been nominated to be Secretary of the Treasury. As a result, it has taken until now for us to get the opportunity to participate. Because this is the most significant confirmation since either one of us has been on the Finance Committee, we did not have the luxury to miss that hearing. So if we have inconvenienced our colleagues by being late, I apologize. I also say that one of the things that is always hard about our business--and our business is a noble business; it is American democracy at work--is that you do not get to choose your allies. If I had an opportunity to choose my allies based on their ability and knowledge and persuasiveness, I would never undertake any battle where I did not have Senator Byrd and Senator Domenici on my side. The problem is that when the Lord handed out ability, He did not distribute basic philosophy and values and also a reading of the facts in the same way He distributed ability, at least from this Senator's own point of view. I find myself, which happens from time to time and never creates happiness on my part when it does, fundamentally disagreeing with two of our most able Members and two Members of the Senate for whom I have a deep affection and a deep respect. What I would like to do today is the following: I would like to try to outline the changes that I believe should be made in the bill. Let me make it clear that I am not for this bill. I see this as harkening back to another day, the days of the Carter administration, where we were basically trying to engage in industrial policy. I will talk more about that in a minute. But if we are going to pass the bill, there are some things we should do--and I hope we will do--that could dramatically improve the bill. So what I would like to do today is talk about those amendments and try, for the convenience of our colleagues, to outline the amendments that I see that we would present today. I can't speak for any other Member of the Senate. There may be others, besides Senator Nickles and I, who have been working on these amendments together, who would want to come over and offer amendments. But to sort of give an outline, I would like to go through and outline what I think is wrong with the bill in terms of what could be improved by amendment. I would like to talk about each of those amendments and try to explain why they make sense so everybody would sort of get the lay of the land of the battlefield that we are likely to contest today and vote on today. I would then like to try to talk about the problem in the steel industry, because Senator Byrd has spoken with such passion and conviction that, if you are going to oppose what he is trying to do, you have an obligation to explain why you disagree. So I will try to at least give you the view through the lens that I have in looking at this problem as to where I am coming from and why I think as I do. Then it would be my proposal to either offer the amendments that I have outlined and simply have them there so anyone could debate them or, if Senator Nickles comes over, then we could go back and forth. But it is not my objective to try to delay the process. It is pretty clear what I would like to at least have the Senate make a decision about today.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent for 5 minutes to speak on the bill that is pending, given the role that I played in reaching this point.

Mr. GRAMM. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GRAMM. Mr. President, I think some explanation is due of how we came to be where we are and the circumstances under which this bill is being considered. When the bill was reported from the Finance Committee, it was funded by changing the Tax Code in a way that would have produced additional revenues--by conventional definition, that would be a tax increase. I felt at a time where we find it virtually impossible to control discretionary spending, at a time where in the same day--as was the case yesterday--we vote to secure in a lockbox the surplus that is coming from Social Security and then an hour later we vote to break the lockbox open and spend $270 million of Social Security money to subsidize loans to the steel industry, it was a very bad precedent to set at this point in this legislative session where we are coming closer and closer to blowing the top out of discretionary spending in the Federal Government to create a brand new entitlement, no matter how meritorious, and do it by raising taxes. As a result, we had a series of objections to efforts to bring this bill to a vote. Many of those efforts were in the waning hours of various periods of the session before we adjourned for recesses. I have insisted on one fundamental thing which is now embodied in the unanimous-consent request that we have used to bring this bill to the floor; that is, that it be paid for, and that it be paid for by cutting another entitlement program; that it not be paid for by raising taxes. Now, I have no objection to the bill itself. In fact, I congratulate Senator Jeffords. I congratulate the distinguished chairman of the Finance Committee, Senator Roth. I congratulate the ranking member, Senator Moynihan, not only for putting together a good bill but being willing to go back and refine that bill to deal with legitimate concerns that were raised, and produce a situation where I assume this bill will pass unanimously. My objection has never been to the bill itself because the policy embodied in the legislation itself is meritorious. The problem is, there are many meritorious proposals that can be made. At a time when we cannot seem to control discretionary spending, if we start in our first new entitlement program of this session to fund it by raising taxes, I think we create a precedent that could be very harmful to the economy and could ultimately drive up interest rates and threaten the recovery. So, what we have done is ensure that there is no tax increase or any revenue measure in this bill. We have a unanimous-consent agreement that this bill cannot come back to the Senate in this or any other bill unless it is paid for by cutting another entitlement program. So the one thing we can be guaranteed is, in meeting the goals of this meritorious bill, what we are going to be required to do is do what families would have to do if they came up with a good thing to spend money on, and that is we have to go back and find another entitlement that is less meritorious, and we are going to have to find money from one of those other entitlements to fund this bill. I think that is the right way to do it. I thank my colleagues for their patience. I know the bill is supported by a lot of people, and they should, because these are people with disabilities who are trying to work. It has not been easy to stand in the way of this bill. I thought the cause was an important one. I am very happy with the final product. I urge my colleagues to vote for the bill. I assume it will get 100 votes, and I think we are doing it the right way. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, out of courtesy for our colleague from New Mexico, I will go ahead and speak now. First of all, let me make a couple of things clear. No. 1, this bill contains an emergency designation so that not one penny of the funds expended under these loan guarantees will count toward the spending caps. What that means is that in the next 2 years alone, in the years 2000 and 2001, that is $270 million, over a quarter of a billion dollars, if optimistic assumptions about defaults contained in this bill hold up, $270 million, over a quarter of a billion dollars will come directly out of the Social Security surplus. Supposedly, there are offsets for cutting travel and furniture, but the spending caps are not reduced by that amount. So that money, if in fact those cuts were ever made, would end up being spent on something else. The spending in this bill is designated as an emergency, which means every penny of it will come out of the Social Security surplus. We just had a vote about an hour ago where we said we want to stop the plundering of the Social Security trust fund. We do not think Congress ought to be taking Social Security money and spending it on other things. In fact, Republicans have been pretty self-righteous about it. We have held up our little lockboxes, and we have had press conferences. The problem is we hold these lockboxes up, but we keep supporting measures that knock the doors off, springs go flying, the combination thing goes rolling across the room. You cannot have it both ways. You either want to spend money or you don't want to spend money. Nobody should be confused about the fact that this is paid for. The cuts don't lower the spending caps. There is an emergency designation; $270 million minimum in 2 years will come right out of Social Security. We are turning the clock back. The last time we had the Government making loans to business, engaging in industrial policy, was when Jimmy Carter was President. Someone earlier today tried to make an argument that we were doing all of these things because the inflation rate was double digit at the time. Did anybody ever think the inflation rate got to be double digit because we did all of these things? In a period of record prosperity, what are we doing having the Government override the decisions of the marketplace? We do have laws against dumping, and those laws are being vigorously enforced by this administration. Some would say overly enforced. But there are avenues to deal with dumping, and those avenues are being addressed. The last time we guaranteed loans to American industry and to the steel industry in particular, 77 percent of those loans were defaulted. If that happens here, every penny of that is coming right out of the Social Security surplus. This is popular. I am from an oil State. There are going to be people who say $500 million of loans could just do wonders for us. But we are not paying for this. You take out the emergency designation, you change this bill, because then you get cuts in other spending to pay for it. I think we have to make a decision. We have to decide which side we are on. You cannot be for not plundering the Social Security trust fund and be for this bill. So while obviously my State, and the State of the Senator from Oklahoma, would be beneficiaries from some of these loans, we can't have it both ways. We can't stand up an hour ago and say: Don't plunder Social Security, and then an hour later say: Well, if it is for a good reason such as providing loan guarantees for steel and oil, it is OK to plunder Social Security, but it is not OK in the abstract. I can't turn corners that quickly. I can't change sides on an issue in an hour. I do not want people to be confused. This bill has an emergency designation. It will waive the cap for the spending. There are offsets in budget authority, but they do not match up with the spending. There is no lowering of the spending cap to enforce the savings. The truth is, every penny spent from the year 2000 when this program starts until it ends will come directly out of the surplus and, for the next few years, every penny of it will come directly out of the Social Security surplus.

Mr. GRAMM. If you are going to lock it up, you cannot spend it.

Mr. GRAMM. Mr. President, it is my understanding now we are going to have a debate on the cloture motion related to the steel loan guarantee program. It is my further understanding that there are two people in favor of it who wish to speak for it. Senator Nickles was going to speak against it. I ask unanimous consent I might have 5 minutes with Senator Nickles, so we would have 10 minutes in favor of it and 10 minutes opposed to it.

Mr. GRAMM

Mr. GRAMM. Mr. President, I commend the manager of the bill, the distinguished chairman of the Armed Services Committee, Senator Warner, for including in this legislation a one-year extension of the Defense Production Act. As the Senator knows, the Defense Production Act falls under the jurisdiction of the Committee on Banking, Housing, and Urban Affairs. The Defense Production Act is due to expire on September 30, 1999. The Banking Committee has a great interest in the Defense Production Act and we intend to conduct a thorough review when we consider its reauthorization. However, due to the press of other business, specifically the time-consuming task of passing the first modernization of our financial services laws in sixty years, the Banking Committee is unable to conduct such a thorough review at this time. Therefore, I requested that Senator Warner include a provision in the Department of Defense authorization bill to extend the Defense Production Act until September 30, 2000. This extension will allow the Banking Committee the time to give the reauthorization of the Defense Production Act the attention it deserves. Senator Warner was kind enough to include this provision at my request.

Mr. GRAMM. Mr. President, I thank the chairman of the Armed Services Committee for his courtesy and assistance on this issue. I ask unanimous consent that a letter I wrote to Senator Warner on this issue be printed in the Record.

Mr. GRAMM. Mr. President, I ask unanimous consent to vitiate the rollcall vote on the amendment, and I ask for a voice vote.

Mr. GRAMM. I move to reconsider the vote.

Mr. GRAMM. I ask for the yeas and nays.

Mr. GRAMM

Mr. GRAMM. I think we have made our cases.

Mr. GRAMM. I would be willing to do that. But, quite frankly, we had a time limit. It has been exhausted. If it would accommodate the body, I would agree to just have the vote.

Mr. GRAMM. Mr. President, as you know, it takes unanimous consent to allow the Murray amendment to come forward. Any person can object, because you have two amendments pending. I have, I believe, worked out an agreement with the distinguished ranking member to have the vote on the reconsideration of the amendment, where there was a tie vote yesterday, occur either at 5 or after the disposition of the Kerrey amendment, whichever is sooner. If that could be added to your unanimous consent request, I think that would be agreeable to both sides. I have no objection to Senator Murray bringing her amendment up. I simply do not want to leave this matter pending past 5 o'clock, if we can avoid it.

Mr. GRAMM. Reserving the right to object, Mr. President, may I propound a request to the chairman?

Mr. GRAMM. We have the 5 o'clock vote on the reconsideration, correct?

Mr. GRAMM. Mr. President, reserving the right to object, all I want to do is work out a time to bring up a vote that we are not even going to debate on. I will be happy to have it either after the Kerrey amendment or at 5 o'clock. There is some concern here about limiting a second amendment, apparently, on the Kerrey amendment. I do not have a dog in that fight. We are in a position where I can't exercise my right, because we have two amendments, now three amendments, that are pending, which makes the floor manager sort of a gatekeeper. But it also makes anyone else a gatekeeper. All I am asking is if I could get an agreement on a time certain basis and/or following something else. I am not trying to be difficult to deal with; I just would like to work this out before we go on. If 5 o'clock is all right, we can stop whatever we are doing at that point and have the vote. I do not even require any more debate. I just want to settle this issue. I would have to object.

Mr. GRAMM. Mr. President, may I just suggest that we set the vote at 5 o'clock and leave the Kerrey amendment alone? The net result is the same. The Senator was willing to agree a moment ago to do it. If the Kerrey amendment is what is in dispute, it seems that it would have produced this result before. So I just urge my friend from Michigan to allow us to settle the issue. We are going to do it without intervening debate. But the problem is that I have privilege under the rules of the Senate, and that is being precluded by the stacking of amendments that require a unanimous consent request.

Mr. GRAMM. Yes.

Mr. GRAMM

Mr. GRAMM. Mr. President, I yield 10 minutes to the distinguished Senator from West Virginia.