Tom Harkin

Mr. HARKIN

Mr. HARKIN. Mr. President, I have an amendment at the desk No. 4178. It deals with taxpayer subsides for military contractor mergers. This is a very important and timely amendment. I was outraged to learn recently that taxpayers are being asked to foot the bill, in one case to the tune of up to $1.6 billion, for these mergers. In the interest of not delaying my colleagues, and to give an opportunity to continue discussions with those who have raised concerns about my amendment, I will defer offering it until we get the DOD appropriations bill early next month. The House Appropriations Committee adopted a bipartisan amendment identical to mine earlier this month. Therefore, that would be an appropriate vehicle. Before I end, I just wanted to have printed in the Record several quotes from different groups on this subject.

Mr. HARKIN

Mr. HARKIN. Mr. President, I move to reconsider the vote by which the amendment was agreed to.

Mr. HARKIN. Mr. President, I ask that the yeas and nays be vitiated.

Mr. HARKIN. Mr. President, I believe, as modified, this amendment is agreeable to the managers. It has been worked out. I thank them. I thank the manager and the ranking members for their help in working this out. I thank also my colleagues for their cooperation in working out this important proposal. Basically, what this amendment, which passed the House recently by a vote of 353 to 62, would do is begin to ask our allies in Europe to pay a fairer share of the costs for their own defense. The CBO says this amendment would save taxpayers up to $11.3 billion over the next 6 years. I personally think we need to go even further in reducing the taxpayer subsidy for Europe and Japan's defense, but this is a major step in the right direction. It is a victory for deficit reduction and the American taxpayers. Again, I thank the managers for their cooperation. Mr. President, I rise to offer an amendment on behalf of myself, and Senator Kerry of Massachusetts, Mr. Conrad, Mr. Lautenberg, and Mr. Dorgan that calls on our NATO allies to share more of the burden for maintaining stability in Europe and their own defense. This amendment is nearly identical to one on the House Department of Defense authorization bill that was agreed to by a strong bipartisan vote of 353 to 62 on May 14. The CBO has scored our amendment as saving $11.3 billion over the next 6 years. It is time we stopped asking American taxpayers to underwrite the security of our European allies. We are all justifiably proud of the role American played in rebuilding Europe after World War II. The Marshall plan stands as a monument to American generosity and concern for our fellow citizens around the world. We not only helped our wartime allies, but we aided our former enemies as they rebuilt their war-torn societies. Aiding our former enemies to restore their society is the true mark of American generosity. But that was then, and this is now. Times have changed. Germany and Japan are no longer prostrate, exhausted from years of all-out war. Far from it. Germany and Japan are now economic giants, providing significant competition to the United States across a broad spectrum of industries. After World War II, we were justified in stationing troops in Europe and Japan to restore basic order, to provide the security necessary for vibrant economies to flourish and grow. But now it is time for our allies to take over the cost of their own defense. Not only has the threat of world domination by the Soviet Union evaporated, but our allies now have the financial means and internal stability to provide their own defense. In 1991 Japan agreed to pay for 75 percent of the costs of stationing United States troops on Japanese soil by this year, excluding salaries of United States servicemen and women, and United States civilian contractors. Mr. President, Japan has done what it promised. Our total nonpersonnel cost there is $5.8 billion and Japan contributes $4.6 billion or 79 percent. That contribution should increase further, but they are making progress. Why can't our NATO allies pick up a larger share of their defense burden? This amendment allows them to increase their contributions in one or more of 4 areas to meet the goal of increased burden sharing. The NATO allies' four options are: First, gradually increasing their contributions over 4 years to 75 percent of the nonpersonnel costs incurred by U.S. military forces stationed on their soil. They currently contribute about 25 percent of the $8 billion annual costs. Second, increasing their defense spending as a percentage of GDP by 10 percent or at least to a level equal to that of the United States by September 30, 1997. Although U.S. defense spending is declining, the spending by the NATO Allies is declining more rapidly. This provision prevents the United States from picking up the growing difference in defense spending. Third, increasing their budgetary outlays for foreign assistance by 10 percent or to a level equal to that of the United States. This provision gives the NATO allies a nonmilitary mechanism to contribute to the security of Europe. Fourth, increasing their contributions of military assets to multinational, United Nations, or regional peace operations. This provision will prevent the United States from having to bear an unfair amount of the responsibility in future peacekeeping missions. Mr. President, I reiterate, our NATO Allies can choose any combination of the above options to meet the requirements of this amendment. They need not do all four. Should our NATO Allies miss the targets specified above, the President is authorized by this amendment to do one or more of the following: First, reduce the levels of troops stationed in NATO countries. Second, impose taxes or fees similar to those that other nations impose on the U.S. forces stationed in the foreign nation. Third, reduce through rescission, impoundments or line-item veto, the amount the United States contributes to the NATO budget or other bilateral aid accounts. Fourth, take any other action that is currently authorized by law to make our NATO allies pick up a fair share of the defense burden. Mr. President, this amendment also requires the President to report to Congress by March 1, 1997, the progress that has been made in achieving the goals enumerated here. This deadline is set so that we may review the progress in time for next years' Defense authorization bill. This is indeed a very modest amendment. I think we should go much further to reduce the American taxpayers' subsidy for Europe and Japan's defense. As we work to balance our budget and reduce the debt, I do not think we can justify any subsidy. But this is a reasonable first step to that end. Mr. President, this amendment has been endorsed by Taxpayers for Common Sense and Citizens Against Government Waste. Let me read a couple of paragraphs from their letters. Taxpayers for Common Sense: As the United States attempts to rein in its defense budget, it is no longer acceptable for the U.S. taxpayer to pay the lion's share for keeping American troops in Europe. While the Japanese Government pays over 75 percent of all non-personnel costs for American military bases in Japan, our wealthy European allies typically make a collective contribution of less than 25 percent. We support your amendment's call for a 75 percent contribution standard. Citizens Against Government Waste: This amendment, which would require host countries to pay 75 percent of nonpersonnel costs, is essential to maintaining a strong and cost-effective military partnership with our allies around the world. If enacted, this proposal would save taxpayers $11.3 billion by 2002. As the United States continues to define its role in the post-Cold War era, we must realize that we can no longer afford to bear the brunt of maintaining a large presence overseas. However, we do recognize that American strength is necessary to maintain peace and cooperation worldwide. Your amendment successfully addresses both issues. The 104th Congress' clear mission is to eliminate unnecessary spending, while ensuring that vital obligations, such as protecting our national security, are fulfilled. Your amendment is a vital part of that mission. Not only does it provide for continued international cooperation, but it also saves the taxpayers billions of dollars. Your amendment makes a fundamental contribution to the debate on the Defense Authorization and its passage is an important step toward achieving a balanced budget. We strongly urge its adoption by the Senate. Our amendment is also supported by the State Department and the Defense Department. Let me read from their respective statements: State Department: We support this amendment because it supports U.S. policy objectives in achieving equitable responsibility sharing of global security interests with our allies. This amendment does not tie the hands of the Administration in the execution of U.S. policy. This amendment does allow the President the flexibility in pursuing different avenues in attaining the same objective without undermining the credibility of the United States commitments to our allies. It recognizes that one formula does not fit every allied country or every region and permit[s] our allies to choose to contribute on an equitable basis tailored to their own political, economic, cultural, and historical perspectives. Department of Defense: After detailed review, analysis and consideration of the provisions in the amendment, the Department believes it provides a solid basis upon which to proceed in future discussions and negotiations with our allies around the world to attain greater Responsibility Sharing in defense and security issues of common concern. This amendment has the overwhelming support of the House, and the support of the administration. If you agree that our allies are now sufficiently strong economically to pay a fair share for their security, then I urge that you also support this amendment. I ask unanimous consent that the letters of support be printed in the Record.

Mr. HARKIN. Mr. President, I also ask that Senators Conrad, Lautenberg, and Dorgan be added as cosponsors.

Mr. HARKIN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. HARKIN. Mr. President, I call up amendment No. 4177, and I send a modification to the desk and ask that it be considered at this time.

Mr. HARKIN. Mr. President, I ask for the yeas and nays on the amendment.

Mr. HARKIN

Mr. HARKIN. Mr. President, I commend my colleagues, Senators Nunn, Lugar, and Domenici, for developing this amendment which is a good first step in addressing the principal security threat facing the citizens of the United States today. I am pleased to join them in sponsoring this important antiterrorism proposal. I have always been in favor of the wise use of taxpayers' funds and this amendment meets that test. We have to be prepared to combat terrorism. Currently we have precious few means to deal with the threat of a terrorist attack of any kind, let alone nuclear, chemical, or biological terrorism. This amendment focuses on that vacuum. Events from Oklahoma City to Tokyo show that there is a major security risk in the ordinary--a rental truck or a subway. Training local emergency officials to recognize the signs of weapons of mass destruction in these mundane circumstances will help prevent these insidious attacks in the first place. Further training will allow local officials to ameliorate the impact should such a tragedy occur. Mr. President, this is the right amendment at the right time for the people of Iowa and the United States. If my colleagues care about protecting Americans on American soil, I urge them to support this amendment.

Mr. HARKIN

Mr. HARKIN. Mr. President, a couple of days ago the Mason City Globe-Gazette in my State of Iowa published an excellent editorial calling on national policymakers to put partisan politics aside in order to pass bipartisan welfare reform. I couldn't agree more. Over the past 3 years I have talked time and time again about the need to enact bipartisan welfare reform which demands responsibility from day one, requires work and releases welfare families from the cycle of dependency. The Iowa family investment program provides us with an effective model for achieving these goals. Since Iowa began implementing the welfare reforms in October 1993, the number of people working has almost doubled, the welfare caseload had declined, and welfare costs are down. I call that a triple play. Those are good reasons to look at the Iowa experience as we craft legislation, but I commend the Iowa experience to my colleagues for another reason. In 1993, Iowa enacted sweeping changes to the welfare system and did so with very strong bipartisan support. In fact, the Iowa plan received only 1 dissenting vote from the 150-member Democratically controlled general assembly and was signed into law by our Republican Governor. It shows that it is possible to work together on welfare reform and the State of Iowa is better because of it. In 1994 I sought to take a page from the Iowa play book and went to work with my Republican colleague from Missouri, Senator Kit Bond to develop bipartisan welfare reform legislation modeled on innovations occurring in our respective States. The result was the first bipartisan welfare reform legislation in that session of Congress. The bill was reintroduced again last year. For the most part partisan wrangling prevailed in 1995. There were a few instances of bipartisan cooperation, but they were quickly overtaken by political gamesmanship. There is one lesson to be learned from the past year and half-- confrontation and partisanship is a prescription for failure. The only way we can truly accomplish welfare reform this year is to stop the political games and join forces across the aisle to craft bipartisan welfare reform which accomplishes the goals that the American people support--a welfare system that puts people to work and gets them off public assistance quickly and permanently. Mr. President, I ask that the text of the editorial be printed in the Record, and urge my colleagues to hear its message. The editorial follows: [From the Mason City (IA) Globe-Gazette, June 18, 1996] Reforming Welfare and Partisan Politics Should be Separate It's true that in many cases, public opinion changes faster than the politicians. That's certainly the case with welfare reform, according to a recent Associated Press poll. The poll shows that most Americans favor converting welfare into a work program and that half are ready to pay more taxes to make jobs available. The poll also shows that most Americans wish to limit welfare funds to single mothers, and to put single mothers on a work plan. Those types of plans are being tested in several states, including Iowa and Wisconsin. The reform agenda is clogged, however, in the Washington political system. A welfare system that puts people back to work, and aims to get them off welfare is a good idea. The only exception that should be added is that the system include some compassion. One of the reasons welfare reform hasn't taken off in Washington has to do with political posturing. Both Democrats and Republicans are turning the debate into a class issue. That's not where the issue belongs. For example, both Democrats and Republicans make a major issue out of single mothers. Truthfully, however, single mothers make up only a small percentage of the welfare recipients. Both sides also talk about welfare recipients as if they spend their lives on the dole. The truth, however, is that most welfare recipients move in and out of the system. A small percentage spend an extended amount of time on welfare. A welfare reform plan that includes work or schooling instead of hand-outs is a good idea. Limiting welfare recipients to two years of benefits is also an improvement. Both Democrats and Republicans have said they would support plans similar to those currently in use here and in Wisconsin. But nothing will really happen until highly partisan politics are removed from the picture.

Mr. HARKIN

Mr. HARKIN. Let's do 5 for both.

Mr. HARKIN. Some have been stated before by Senator Dorgan and Senator Conrad: ``We don't see a connection between the numbers out there and what we feel in our business. There is absolutely no inflation. There's no pricing power at all.''--John Welch, Jr., chairman, General Electric. ``There's no sign of pricing pressure anywhere . . . This economy can grow more than 2 or 2\1/2\%, and we ought to let it do it.''--John Welch, Jr., chairman, General Electric. ``This is the most disappointing recovery we have ever seen . . . Each time we try to do a little better than 2.5% growth, we get slapped down by tight monetary policy. The recovery is lackluster and it shouldn't be.''--Kent ``Oz'' Nelson, CEO of United Parcel Service (UPS). ``Inflation is not a threat in the United States. Nor is it for the foreseeable future. It has been remarkably flat and will remain so unless the Fed or the markets begin spurring inflation with high interest rates. The old domestic indicators, while perhaps important in gauging certain narrow trends, no longer determine the broader inflation outlook.''--James Robinson, former CEO of American Express. ``At the Fed, the attitude is to avoid inflation at all costs. But out in the real economy, our people are concerned about the cost--the lost jobs, the lost profits and so on, which over time can be considerable.''--Martin Regalia, chief economist, Chamber of Commerce. ``. . . the No. 1 objective should be growth, not [containing] inflation.''--Bernard Schwartz, chairman and CEO of Loral Corporation. ``The economy clearly has the brakes on now and shouldn't.''--Joseph Schell, senior managing director of Montgomery Securities.

Mr. HARKIN. Mr. President, I yield myself 15 minutes.

Mr. HARKIN. But, Mr. President, if you are on the side of working families, and small businesses that have to borrow money to expand, or on the side of manufacturers that need new plants and equipment, or on the side of farmers who need to borrow money to get ahead and to provide for that growth in our economy, you need lower interest rates than what we have right now. That really is the fundamental issue we are coming down to. The disparity between the rich and the poor grow. The middle class is paying more and more in interest rates. Check how much debt has gone up in our country. I mean privately held debt. People are paying too much on interest charges. To the extent that the Fed keeps that interest rate high, it is an unfair tax on our people. We cannot have the kind of growth we need with the kind of policies at the Fed. This debate has been healthy. It has nothing to do with personalities, but it has a lot to do with monetary policy. As I have said before, Mr. President, the Federal Reserve System is not an entity unto itself. It is not a separate branch of Government. It is a creature of Congress. Congress has the right, the duty, and the obligation, I believe, to answer the real needs of our people and to provide for growth in our economy. If that means we need changes at the Fed, then we ought to make those changes, whether it is an individual who leads it or in the way that it is structured and the way that it runs. We here in Congress ought to be making those changes so it can provide for more real growth in our economy. I thank the President, and I thank my friend from Florida. It has been a good debate. I look forward to more of these as we go through the remainder of the year. Mr. MACK addressed the Chair.

Mr. HARKIN. How much time remains on both sides?

Mr. HARKIN. I understand I have 5 minutes. I will take 30 seconds. I want to respond to my friend from Florida by saying in 1993 the President offered and we passed a deficit reduction package. It went into effect October 1993. We began reducing the deficit, and the deficit has been coming down ever since. The deficit is now 60 percent lower than when President Clinton took office. What did Alan Greenspan do? He raised interest rates. I thought it was supposed to be axiomatic, as we reduce the deficit, interest rates will come down. They will only come down if you have a Fed chairman that correctly corresponds Fed policy with monetary policy, with the fiscal policy of America. We have been reducing the deficit. Interest rates are going in the opposite direction. Please, somebody explain this anomaly. Last, I want to say we have 7.5 million unemployed, 1 million not counted, 4 million part-time workers in America. These are people that can enter the work force. We can have labor growth and we can have that kind of growth without increasing inflation. I yield the balance of my time to the Senator from North Dakota.

Mr. HARKIN. Mr. President, I ask unanimous consent for 2 more minutes per side.

Mr. HARKIN. Mr. President, I yield myself the remainder of the time. I thank my colleague from Florida. He is a good friend of mine. He is someone who has paid a lot of attention to this issue. Quite frankly, I agree with him on this whole issue of growth. I think we ought to have more debates on how we go about it. I think it is a legitimate area of debate for this Senate to engage in. I hope this debate today--in fact, I intend this not to be the end but the beginning of a process of debating this issue further this year and going on into next year, because it is too important an issue to just sort of shove aside how we go about increasing our growth. The Senator from Florida is absolutely right. I agree with him. To sit back and say 2.5 percent growth is fine, that is condemning future generations of Americans, and our kids, to low growth, to terrible jobs, to not being able to buy their own homes and to having a good quality of life. I think it condemns America to a lower place among the nations. We do not have to accept that 2.5 percent growth. I agree with the Senator from Florida. It is way too low. And whether it is the President or whether it is the Fed, whether it is the President's Council of Economic Advisers, his inner circle, or whether it is Mr. Greenspan and the people at the Fed saying that, they are both wrong. I think we ought to think about how we can have higher growth. And I believe we can. Where perhaps my friend from Florida and I begin to diverge is here. My friend from Florida says that perhaps by decreasing interest rates, we will drive up inflation. He refers time and time again to the 1970's. Economist after economist, business leader after business leader will point to the fact that this is not the 1970's. The world has changed dramatically in the last 20 years. We have a world economy like we did not have 20 years ago. We have jobs offshore. We have production offshore. We have mass wholesaling and pricing in this country, that Wal-Mart experience, as I often call it, that we did not have 20 years ago. So the whole world has changed. The factors that led to the inflation in the 1970's are not there today. The economy's ability to resist inflation is greater. Economists point to that time and time again. Just as I believe we spent untold billions of dollars refighting World War II during the 1950's and 1960's--I will not get into that--which led to some of the mistakes we made in Vietnam when that war was passed, I think we are spending untold billions of dollars now in taxes on the middle class because we are fighting the inflation war of the 1970's. But it is not there. There is no inflation there. In fact, some economists will say, if you look at the U.S. economic history from World War II to the present, there really has not been much core inflation. What happened in the 1970's was energy shock. That is the largest factor that drove up inflation. Once we got over that we got back on course again. So those threats are not there now. The threats that are there now is what, again, was in the paper this morning. People talked about the labor shortages, that they are bidding for jobs. Yes, in certain parts of the country, that is true. There was another story by the same writer in the paper this morning about the ``Economy's Growth Gets Right Down to the Bottom Line.'' What did he point out? That more and more of the growth is going to corporate profits, not to wages. What has that led to, in part? This story in the New York Times this morning, ``Income Disparity Between Poorest and Richest Rises.'' That is what it boils down to. High interest rates are taxes, just as inflation is a hidden tax on those who have saved. High interest rates are hidden taxes on those who are working today. Are our working families trying to buy a car, educate their kids, buy a home? It is a hidden tax on our farmers. It is a hidden tax on our small businesses. That is why I argue for a balanced approach. We need balance between the concern for inflation and the need to maximize both employment and production. A 1-percent increase in interest rates means the payment on the average home mortgage on a house costing about $115,000 is about an additional $1,000 a year. That is a tax. For the average Iowa farmer, a 1-percent increase in interest rates is an extra $1,500 in interest payments every year. That is a tax. For the average Iowa restaurant, the cost is $1,000 a year for a 1-percent increase in interest rates. That is where we are. It is sucking the lifeblood out of our small businesses, our farmers, our working families. Let us get back to fundamentals. Who likes high interest rates? Well, if I have the money to loan, I like high interest rates.

Mr. HARKIN. Mr. President, first of all, I want to thank Senator Daschle and Senator Lott for making sure that we had this time for debate. Some of my colleagues have said before--and I have said since this nomination came down to us in March--that what we wanted was some time to lay out the record and to debate monetary policy. I wish we did this more often. This is not a debate about personalities, or character. I have a great deal of respect for my friend from Virginia. It is not a debate about character at all. I and others happen to think that Mr. Greenspan's performance at the Fed has left us wanting in this country; and that his guidance and direction of the Fed is taking us in a slow growth path that is robbing us of jobs and economic growth in this country. It has nothing do to do with character. I just happen to think that Mr. Greenspan happens to be wrong. I and those of us who are taking this position are not alone in that assessment. I will read some quotes from a lot of people that believe that Mr. Greenspan basically has the wrong concept of what is happening economically in America today. So what is this debate really about? Is this a lot of economic terms? I have been guilty myself. I have thrown out ``NAIRU''; ``price deflators''; and ``CBI's.'' And people's eyes tend to gloss over when we talk about those things. Sometimes we have to get down to what this debate is really about. It is about working men and women; it is about small business; it is about our farmers; it is about the middle class; it is about the impact on their lives from a policy of high interest rates--a policy that says that every time we have a spurt in growth the Fed raises its interest rates and slams on the brakes. This debate is about growth in our economy. There are those who look at the last several years of Mr. Greenspan's stewardship at the Fed and say, ``Well, we have had growth.'' Well, yes. We have. It has been comparatively about a C average. If we are happy with a C average in America, fine. I am not. I believe we can do a B, or an A in America. I believe our workers can be even more productive. I believe technological changes that are rapidly coming on line are going to increase our productivity. To say that we have reached some plateau of growth is like saying that when the cavemen invented the wheel they said they did not need anything else. I am sure they probably thought at that time that they did not need anything else. They had reached their limits. We have heard it time and time again--that somehow we have reached our limits of growth in America. I do not buy that for a minute. And I do not buy it--that we can only grow 2 or 2.5 percent when there are so many indicators out there that we can grow at 3 or 3\1/2\ maybe as much as 4 percent for a sustained period of time, and not just 1 year. You look at Mr. Greenspan compared with the years before him. We look at growth from 1959 to 1987 versus 1987-95. What do we find under Mr. Greenspan? We find that in the previous year before Mr. Greenspan real GDP averaged 3.4 percent growth. Under Mr. Greenspan it averaged only 2.2 percent growth. Income per capita averaged 2.5 percent growth prior to Mr. Greenspan; only 1.2 percent under Mr. Greenspan. Payroll and jobs: 2.4 percent prior to Mr. Greenspan; 1.7 percent under Mr. Greenspan. And, productivity: Prior to Mr. Greenspan, our productivity went up at an average rate of 2.3 percent per year; under Mr. Greenspan, it has only been 1.1 percent. So I guess, if you are happy with this kind of lackluster performance in our economy and what the Fed has been doing, I submit that you probably ought to vote for Mr. Greenspan because that is the direction he is guiding and directing our Federal Reserve policy. I do not think that is acceptable for America. I believe we can do better than that. And it is monetary policy that is doing it. It has nothing to do with our vote here in the Senate or in the Congress. It has to do with what the Fed is doing with interest rates. Again, I would say that this is not a debate as some have said between high inflation and low growth, that somehow if we grow faster we are going to have high inflation, and, therefore, we cannot have that high growth because we want low inflation. Mr. President, I refer my colleagues to chapter 9 of Lester Thurow's new book called ``The Future of Capitalism.'' I am going to read certain parts of it because I know that Mr. Thurow has done a very good job in pointing out that the ``beast of inflation'' has indeed been slain and that we are fighting old battles. As my friend from North Dakota said, Mr. Greenspan is fighting a war that occurred back in the 1970's but we keep dredging it up all the time. Here is what Mr. Thurow had to say. He said: In the 1970s and 1980s fighting inflation became the central preoccupation of the industrial world. . . . The factors that produced inflation in the 1970s and 1980s simply disappeared, and structural changes have occurred to make the economies of the 1990s much more inflation-proof than those of the 1970s and 1980s. . . . But as is often the case, beliefs change more slowly than reality. Inflation is gone but inflation fighting still dominates central bank policies. . . . The problem can be seen in the activities of the American Federal Reserve Board in 1994 and 1995. At the beginning of 1994 the Fed saw an economy so inflation-prone that even what was by historical standards a slow recovery from the 1991- 1992 recession (2.4 percent growth in 1993; 3.5 percent in 1994) represented an overheated economy. Because of this belief, seven times in twelve months, from early 1994 to early 1995, the American Federal Reserve Board boosted short- term interest rates. How much? One-hundred percent. To this day, when I tell audiences that the Fed increased interest rates under Mr. Greenspan by 100 percent in 1 year, they do not believe me. But this is the fact. Since February 1994, Federal funds rate, 3 percent; February 1995, 6 percent. And what has happened since then? We have only come down three-quarters of a point, and we are still at this very high level. I am quoting now from Mr. Thurow's article: Yet every time, the Chairman, Alan Greenspan, admitted that the Fed could not point to a hint of inflation in the current numbers. The Fed could not point to inflation because there was no inflation. The broadest measurement of inflation, the implicit price deflator for the gross domestic product, fell from 2.3 percent in 1993 to 2.1 percent in 1994. In the third quarter of 1995 it was running at the rate of .6 percent. Mr. Thurow goes on: If all of these factors are put together, the real rate of inflation outside of the health care sector was undoubtedly very low, perhaps even negative, during the entire period when Alan Greenspan was worrying about inflation. Greenspan could not see any inflation in the indexes because there was no inflation to be seen. By raising interest rates in 1994, the Fed killed a weak American recovery that had yet to include many Americans and slowed a recovery that was barely visible in the rest of the industrial world. Well, Mr. Thurow I think laid it out very clearly. As he said: The numbers that have increased the Treasury bond rates and 30-year fixed mortgages are not because of inflationary expectations. They reflect an uncertainty and hence the risk premiums that investors must demand to protect themselves from a Federal Reserve Board prone to seeing inflation ghosts where they don't exist. Mr. President, I ask unanimous consent that this article by Mr. Thurow be printed in the Record.

Mr. HARKIN. So, yes, there is a lot of complicated economic terms, statistics, and charts that we can put up here. Let us not get lost in these complexities. We are talking about simple fundamental things-- real people, families trying to make a payment on their house, trying to buy a new car, trying to work with their bank to get the funds to put in next year's crops for our farmers, or to operate a small business. We are talking about creating more and better jobs in America, about growing our economy faster, about raising wages. That is what this debate is about. After all, Mr. President, raising the living standards and real wages of ordinary Americans should be our No. 1 economic challenge, but time and again the policy of the Federal Reserve under Mr. Greenspan has stood in the way. That should not be. Under current law, the Federal Reserve is obligated to conduct a balanced monetary policy to reconcile reasonable price stability with full employment and strong economic growth and production. But under the Greenspan Fed that balance has been lost. In 1978, we passed the Humphrey-Hawkins bill which mandated that the Federal Reserve take into account employment, full employment, and production along with inflation in setting its policies. I see my friend from Florida is in the Chamber. He has introduced a bill on the Senate side, the Mack bill, that would remove that consideration from the Federal Reserve, to consider full employment and production and leave the Fed only to consider inflation. I respect his opinions on that, his judgment. We happen to disagree on that. I think the Fed ought to have in its considerations a balanced approach--inflation, yes, but also full employment and production. I would point out that Mr. Greenspan has come out in favor of the Mack bill, to take away from the Federal Reserve requirements in law that we say they must take into account, full employment and production, in their setting of monetary policy. I think that is wrong. And for Mr. Greenspan to support that policy indicates that he again has his eye only on inflation, the ``ghost of inflation,'' as Mr. Thurow says, and not on a balanced policy. So what has happened? Middle-class Americans have paid the price. We have seen what has happened with interest rates. And we have higher interest rates. Let me just say this very clearly, Mr. President. What we have operating now in America on middle-class families is what I call the Greenspan tax--yes, the Greenspan tax on American families. Higher interest rates are nothing more than a tax on hard-working middle-class families, farmers, and main street businesses. One of my colleagues was in the Chamber last week and referred to high inflation as an unfair tax on working families. That is true. But high interest rates are also an unfair tax. We do not have any inflation out there, there is none of it on the horizon, and yet we have inordinately high interest rates. The real threat and the real tax today on our middle class, our farmers, and our small businesses is unnecessarily high interest rates. So we need a Fed Chairman who looks at growth and jobs and wages and says we can do better, not saying, oh, 2.2 percent is fine. We can grow much faster than that. And we do it without the threat of inflation. We live in a global economy, a time of unprecedented competition, rapid technological change. All of this means we can have fuller employment, higher productivity without inflation. We seem to be living in a world that if we begin to do better and our economy begins to grow, that is bad for America, the Fed slams on the brakes, and we cannot grow any faster than that. It is seen as a bad thing. But faster growth and higher wages and more jobs and lower interest rates should not be seen as obstacles. They should be sought out as our goals. In short, we need a balanced policy based on raising economic growth, increasing jobs, the long-cited continued vigilance against inflation. I do not believe we have gotten that under Mr. Greenspan, and we have seen that common thread throughout his entire record, that all through his entire time Mr. Greenspan has focused on inflation. Start with 1974. Mr. Greenspan was Chair of President Ford's Council of Economic Advisers. As I discussed in depth last week, in his zeal to fight inflation to cure the recession of 1974, Mr. Greenspan prescribed the wrong medicine. Unemployment skyrocketed, and the recession got even worse. This is how Jerry Terhorst, President Ford's press secretary, recounted it: To be blunt about it, the President has lost confidence in the ability of his economic advisers to predict the economic future. This fall, when he fashioned the anti-inflationary package he presented Congress following the series of economic summit meetings, Ford relied heavily on the forecasts of his consultants, including Economic Council Chairman Alan Greenspan. They assured him that rising prices and production costs were the prime enemy of a healthy America. He was advised that while a recession lurked distantly on the horizon, it was not an imminent prospect that would confront him immediately. Well, what happened? The recession got worse, unemployment skyrocketed. In two months, the unemployment rate increased by 1.2 percent.

Mr. HARKIN. How much time do I have remaining?

Mr. HARKIN. I yield myself 4 additional minutes. Greenspan's prognosis of the Nation's economic ills in the 1970's did not comport with what happened, the same way in the 1980's. And I submit for the Record an article that appeared in Investors Business Daily called ``Greenspan's Rotten Record.'' Let us take a look again at what happened to growth during the period of time of former Chairman Volcker. We see growth of 6, 3.3, 4.4. coming out of the recession in the early 1980's. Now, Mr. Volcker had a 2.5 percent growth rate average, but he had a 13 percent inflation rate facing him when he came in. He brought inflation down in half and yet he had still had a 2.5 percent growth during his term even while he brought inflation down in half. Mr. Greenspan comes in. The real growth during his period of time has been 2.2 percent. Inflation was only 4.1 percent when he came in. It has come down to 3.2 percent--a very small decrease in inflation and yet very low growth. That is what we are talking about, the low growth rate. And again, it has to do with Mr. Greenspan's rationale, what his mindset is. Last year, I believe it came out, perhaps in an unguarded moment. I do not know. I will read from the hearing record so the record is straight. I have told people before that Mr. Greenspan was in favor of going back on the gold standard and people tell me that is not right. Well, I do not know if it is right or not. I can only take Mr. Greenspan at his own words. Last year, 1 year ago, not 20 years ago, last year, Senator Sarbanes says: All right. Now, my next question is, is it your intention that the report of this hearing should be that Greenspan recommends a return to the gold standard? Mr. Greenspan. I've been recommending that for years. There's nothing new about that. Senator Sarbanes. Okay. So, you'd like that. You want to reaffirm that position. Mr. Greenspan. I have always held that system of price stability, which would come from any form of credible type of non-inflationary environment, would be very beneficial to financial system. Senator Sarbanes. And you think we should go on to the gold standard. Mr. Greenspan. I, personally, would prefer it. That would probably mean that there is one vote in FOMC for that, but it is mine. Again, Mr. Greenspan would like to go back on the gold standard. I would like to see how many people would stand here on the Senate floor and defend this and say we ought to go back to the gold standard. Maybe a few. But that is where Mr. Greenspan is coming from. Last, Mr. President, it is not just me and a few others on our side. I ask unanimous consent a series of quotes from business leaders on Fed policy be printed at this point in the Record.

Mr. HARKIN. I did not hear the Senator.

Mr. HARKIN. Mr. President, I ask unanimous consent that I be given an additional 5 minutes.

Mr. HARKIN. Reserving the right to object, my friend from Utah, this is just to talk about Ms. Rivlin and not the Fed policy? Is the Senator going to talk about Fed policy?