Pete Hoekstra

Mr. HOEKSTRA

Mr. HOEKSTRA. That is correct.

Mr. HOEKSTRA. Mr. Speaker, will the gentleman yield?

Mr. HOEKSTRA. I thank the gentleman for yielding. As we begin to talk about the things that have been going on, I think it is also important to recognize that the gentleman and I are going to be part of the first Congress that has gone about doing its business, whether it is oversight, and that is the committee that I share, an oversight subcommittee on the Committee on Education and the Workforce, but we are going to be part of an historic Congress, because for the first time in 29 years, in 15 or 16 days, we will have a surplus budget. So as the gentleman and I have been carrying out our responsibilities of oversight of our laws, and the Congress as a whole, and I serve on the Committee on the Budget as well, has been getting a lot of other things done as well. So there are a number of things that are going on here in Washington that are different and effective and positive versus what there is sometimes seen as the ugly part of our job, which is doing the oversight. I thank the gentleman for inviting me down here, because we have had the enviable task of spending the last 15, 16 months taking a look at the International Brotherhood of Teamsters, America's largest private sector trade union, who in 1989 signed a consent decree because of a racketeering charge that basically put them under the oversight of a Federal court and the Federal Government. They are under the supervision of the Justice Department and the courts are watching them. Now, why is Congress involved? And I think this is where the connection can be made about oversight and the impact to the American taxpayer and the impact to the rank-and-file people in the Teamsters. Let me just lay out what happened. In 1996, the Teamsters conducted a new election for president of the Teamsters. It is a process they go through every 5 years. They conducted their election, and 7 months later the election got overturned. The person who was elected, his election was invalidated, Mr. Carey, and it was determined there needed to be a rerun election. And it is like, okay, that is fine, the Teamsters will conduct their new election, which we are still waiting for that to happen because there was one problem: The 1996 election was paid for by the American taxpayer. That is why in this case we are even doing more oversight than what the Labor Department normally does for union activities and other reviews of American labor law. In this case the American taxpayer paid for a Teamsters election that was invalidated because of corruption. It was somewhere in the neighborhood of $18 to $20 million of American taxpayer money. We paid for the election for the Teamsters in the U.S. and in Canada. So American taxpayer dollars were used to fund the Teamsters election in Canada, $18 million to $20 million. The gentleman was talking about the campaign fund-raising. Sometimes people say, well, there you go, making your accusations again. Where is the beef? The gentleman's committee has had difficulty in interviewing witnesses. He has had difficulty getting access to certain information. We have had some of the same problems, but we do have some court documents and these basically are what the defendants have pled guilty to. Three people have pled guilty to various money laundering schemes. Another person has been indicted. The number two person at the AFL-CIO is pleading the Fifth. Now, the amazing thing to me is taking the Fifth, meaning that we know where he is, we believe that he has been implicated, but he will not come and talk to us. He will not tell us about his participation in this. For the three people who have pled guilty, what did they do? Who was involved? We have come across some of the same players as the gentleman has come across, and without getting into their names, this person was a 41 percent owner of a political consulting firm. This November Group performed work for, among others, the IBT, the Carey campaign, and the Democratic National Committee and its 1996 coordinated campaigns with State democratic parties. What did they do? In general, the use of treasury funds in connection, and here we are talking about general treasury funds of the Teamsters, general treasury funds in connection with a Federal election was limited by Federal election law to nonpartisan voter education and get-out-the-vote efforts. Political spending by the IBT was supervised and directed by the IBT's director of government affairs. What did they do? Statutory charges: Co-conspirators were not charged as defendants herein. Others known and unknown unlawfully, willfully and knowingly did combine, conspire, confederate and agree together with each other to make materially false statements and representations and to falsify, conceal and cover up, by trick, scheme and device, material facts in a matter within the jurisdiction of the executive and judicial branches of the government in violation of Title 18. What does that mean? Sections 1341 and 1346: To embezzle, steal, abstract and convert funds belonging to the IBT, in violation of Title 29 of the United States Code. Basically, what happened is the leadership of this union stole money from its own rank and file. If we go on a little further, we find out, willfully and knowingly having devised and intending to devise a scheme and an artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations and promises, namely, a scheme and an artifice to deprive members of the IBT. These people were working for the President of the IBT, and what were they going to do? A scheme and artifice to deprive members of the IBT of, A, money, B, their right to the honest services of their officers and employees and, C, their right to have the 1996 IBT election conducted in conformity with the rules. They did everything they could to break the law. And others, blank and others, caused IBT general treasury funds to be applied to promote the Carey campaign in violation of Title 29, United States Code; illegally using and diverting IBT general treasury funds, including embezzling, stealing, abstracting and converting such funds to make contributions to political organizations in order to obtain in exchange donations to the Carey campaign. This is where the DNC gets involved, but before we move and talk a little bit about the Democratic National Committee, the terms in here are embezzling, stealing, abstracting, converting, such funds to make contributions to political organizations in order to obtain and exchange donations to the Carey campaign. We talked about how this affected the taxpayers. We spent $20 million on a failed election. We are going to spend $4 million on a rerun. The Teamsters were very generous. They said they would contribute two. So their own leadership is, well, you know, we are beyond that, but they embezzled and stole. What was happening to the net worth of the Teamsters as their leadership was embezzling, stealing and abstracting and converting such funds to make contributions to political organizations? The net worth of the Teamsters a few years ago was $157 million. As recently as a few months ago, within the last half year, their net worth was $700,000, still a big number but when you go from $157 million to $700,000, you wonder what these people were thinking, but now it is not that surprising. Embezzling, stealing, abstracting and converting such funds to make contributions to political organizations in order to obtain in exchange donations to the Carey campaign. The union leadership was stealing their rank and file members' money and they were going to other organizations to find a way to scheme, to launder money through. One of those organizations they went to was the DNC. Does the gentleman have a question?

Mr. HOEKSTRA. Mr. Speaker, Martin Davis, one of the three people who pled guilty, barred from work with the Teamsters and fined $204,000; Jere Nash, barred from work with the Teamsters, fined $10,000; Michael Ensara barred from working with the Teamsters and fined $126,000. Now it gets to be kind of interesting. We talked about the Democratic National Committee. Citizen Action, their national office, implicated in the swap scheme. Who is Citizen Action? Citizen Action is a lobbying political advocacy group here in Washington. And what do they advocate? Clean and fair elections. Clearly implicated through this whole process. Barred from working on Teamsters elections. But they are part of this swap scheme. You can sit there and say, they are in Washington and they are campaigning. It is kind of interesting what happened. Like many of these organizations, they have a national headquarters and they have State chapters. They are all trying to advocate for the same thing, which is clean and fair elections, at least with Citizen Action. That was one of their key messages. Washington sold them out. Washington was clearly implicated. Washington Citizen Action was clearly implicated in this. So what you see again is the Washington organization is corrupt, illegal activities, and they basically sold all of their locals, the grassroots kind of people, they sold them down the river. It is the same thing that happened with the Teamsters, the rank and file members. They are our neighbors. Their kids go to school with our kids. We go to church with them. We play tennis with them. We see them on the streets. We see them in the grocery store. These are our neighbors. What happens? They got sold out by their Washington leadership. Their Washington leadership stole from their own treasury. It is just too frequent of a story. You and I have seen it way too often in the last three, four, five years of good organizations, healthy organizations at the local level, the Teamsters advocating for worker rights and better wages and better working conditions and trying to do the right thing at the local level, in most cases doing the right thing. Their leadership in Washington tarnishing each and every Teamster around the country. At the same time that they are robbing them out of their pocketbook. It is unbelievable what happens to some of these national organizations. What I hope is that as soon as possible they can have a fairly run election, they can have new leadership and they can move forward and hopefully they can get out from under this yoke of government supervision and they can have their union back. Just like I hope Citizen Action, their Washington office is kind of shut down but the people who have worked hard for campaign finance reform and clean politics and all these types of things at the local level, they can reclaim their national headquarters and get some good people in there who do not participate in these kinds of activities.

Mr. HOEKSTRA

Mr. HOEKSTRA. That is right. That is why there is a tremendous opportunity to increase spending or to increase the effectiveness of our current spending without spending any more money. The issue here for so many of our programs, I want to give you one example, you will love this one. Today we had a hearing on the labor department, a program called trend setters. Remember that word. This is trend setters. This was where the labor department was trying to identify apparel companies that were meeting certain criteria and these types of things. We questioned whether the labor department actually had the authority to put together this type of trend setter list. Well, to be a trend setter or to make sure that the labor department was a trend setter in how they communicated this information to the public, they created a web page. All right. So they are on the net. They stopped the program, they said, because of some criticism. They stopped the program in March of 1997. The program went dormant 1997. We had a copy of their web page from March of 1998, and we ran off their web page this morning. This is a program that was dormant. So supposedly they had done no work from March of 1997 until today. They had done nothing to update or modify this list. Now, I was looking at the list. There was the web page from March of 1998, a year after they stopped the program, to September, and the list of trend setting companies had changed. I asked the question, I said, can you explain to me, if you have done nothing to this program, how the list of companies has changed from March of this year to September of this year. They said, well, you know, maybe it took us that long to update our list. And it is kind of like, excuse me, you are on the net. You are in the information age. You have a trend setter list. You have trend setting companies. The last time you updated your list was March of 1997, and it took you at least 12, and it maybe took you 15 months to update your web page.

Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, that is the reason we have went around the country. We have been in L.A. We have been in Phoenix. We have been in Chicago. We had the hearing in Milwaukee. We have been in Cleveland. We have been in Milledgeville, Georgia, a small, little town. We have just been in Tennessee. What you find, we do not know anything about what needs to happen in those schools compared to the parents and the teachers and the administrators who have come in and have testified. And they are passionate about their kids. We have seen success stories. All of the success stories, all the great things that are happening in these kinds of schools are where the focus is on the kids. And the focus effort is between the school administrators and the parents and other people in that community and the business leaders all taking a look at their community and understanding what is going on in their community and putting together a program for their community. They kind of scratch their heads, and they ask the same question that you asked, why are you in Washington trying to tell us what to do in our community? We know our kids. We know our population. We know the special needs that we have. We know the opportunities that we have. Why do we have to try to fit, you know, our peg into your round hole when there is a disconnect. Because in Washington what do we try to do, I will give us credit. It is not good credit. But I mean we recognize that there are different means out there. So we have created 760 different programs.

Mr. HOEKSTRA. That is right.

Mr. HOEKSTRA. They want it to go down significantly. We can make it happen just by making government more efficient.

Mr. HOEKSTRA. And we are paying for this.

Mr. HOEKSTRA. It only took them 15 months to update the web page of trend setter companies. I just want to know how much money we are spending on a program like that. The gentleman and I both know there are tremendous opportunities here in Washington to find additional savings to build up a surplus, increase efficiency, and move on to what you want to talk about, which is saving Social Security.

Mr. HOEKSTRA. Mr. Speaker, one minute. The reason they do not believe that government should grow at the rate of inflation is that, when they get their paycheck at the end of every week, they find that 40 percent of it is going to government at one level or another, and if we are growing it faster than inflation, it means that that number is going to keep going up. They want that number to go down.

Mr. HOEKSTRA. Before I leave, I would just like to thank the gentleman for leading this discussion tonight. We really now are at the threshold of putting in place a real plan to ensure that future generations will not have to increase taxes to maintain the Social Security benefit levels, and we will not have to reduce benefits for seniors. As we are getting the surplus and getting to balance, we really have the opportunity to start addressing this, and I think this Congress has laid the framework for it and we are going to move forward on this debate and I think come up with some real positive solutions. The gentleman has been instrumental in doing two things: Instrumental in getting us a surplus and instrumental in getting us and keeping us focused on what we need to do to ensure the long-term life of Social Security. I thank the gentleman for the time that he has shared with me tonight.

Mr. HOEKSTRA. Mr. Speaker, if the gentleman would yield, I actually had an interesting case in my district last year. I visited a number of plants in my district, and I remember the date because it was the date we started the Teamsters investigation. Talk about waste. That is $20 million that the taxpayers paid to run the Teamsters election in the U.S. and in Canada. The taxpayers paid for it. I was at a plant the day that that election got thrown out, and I was taking them through some of the numbers and explaining to them that by 2002 we were going to reach balance or surplus. It was a small plant and one of the guys just started laughing and said, ``Sure.'' Well, I went back. I went back the first week of September of this year and told them that by the end of the month, by September 30 when we close our fiscal year, he was right. He should have laughed in 1997, because we did not balance it in 2002; we are actually going to get there in 20 days. In 20 days, we will reach that point where we cross the line, and we are probably past that point already.

Mr. HOEKSTRA. Mr. Speaker, if the gentleman would yield, I do not think we can lose sight of how important that is. I mean, we hear, and I was just reading one of the newspapers, it is kind of like it is a do-nothing Congress. Have not gotten anything done. If we would have told people 2, 3, 4 years ago that by 1998 we were going to reach surplus, they laughed, they said no way. And this Congress has already will have done something that no Congress has done for 30 years. Not only that, and the gentleman may have some other charts that will get to that later on, but I believe we are at the threshold of creating a generation of surpluses that actually enable us to move, that this will not be a blip. But if we keep on track and go after wasteful spending, restructure and work on Social Security and other entitlement programs, we will have a generation of surpluses that will enable us to pay down the debt and reduce taxes and get a government that actually works better and more effectively and is more efficient at serving our constituents. So we have fundamentally changed the debate here in Washington in the last 24 months. We have moved from a debate about how we are going to get to balance to a debate about how we are going to pay down the debt, how we are going to lower taxes, how we are going to free up more money for investments in jobs for our generation and the next generation. We have fundamentally changed the debate and the outlook for America. Huge strides. But they are saying, it is like ``What have you done for me lately?'' What we have done for them lately is we have balanced the budget.

Mr. HOEKSTRA. Mr. Speaker, will the gentleman yield?

Mr. HOEKSTRA. Mr. Speaker, if you take a look at spending growth, I just want to point out we are still, I think, growing faster than what you and I might think is necessary.

Mr. HOEKSTRA. Still faster than the rate of inflation. Let me give you just a couple of examples. We are going to vote on a bill tomorrow, I believe, on dollars to the classroom, our colleague from Pennsylvania. And for the last 18 months, we have been taking a look at Federal education, our role and the impact that we in Washington are having on K through 12 education. We are taking a look at what happens when a dollar comes from the local level, goes to Washington, and since it is about educating kids, the kids are back at the local level, we have got to get the money back there. We are taking a look and saying, when we get a dollar from the local level, what actually happens to it. We find out that it goes through 39 different agencies, hundreds of different programs, and we find out that we lose about 30 to 40 cents of every dollar. We lose it because of the bureaucracy here in Washington. We lose it because we get the money, so then we have to communicate back to a school district that we have got these programs available. They then have to apply for it. We then have to review the applications and decide who gets the money and who does not.

Mr. HOEKSTRA. Mr. Speaker, I think the gentleman is absolutely correct. I came here in 1993, and getting to the chart that the gentleman is going to be talking about next is the one that we were shooting for. We wanted to get to a balance, or more appropriately a surplus budget, and we wanted to get there as soon as possible. In 1993, and we face these choices each and every year and we have been facing them every year since then, are we going to get to a surplus budget? Are we going to match revenues with expenses by increasing revenues with higher taxes or by reducing or actually just slowing down the growth of spending? In 1993, we made the very serious mistake, because we said we are not taking in enough money from the American people. We have some things that we would like to do here. And Congress passed a huge tax increase. At the same time, it was looking at significant new spending programs. We were going to nationalize health care. Government was going to stimulate the economy. We were going to go on a $15 billion stimulus package. So in 1993, the framework was very clearly set that we are going to increase revenues by increasing taxes, and at the same time we are going to increase spending and we are going to promise the American people that we are going to balance the budget. We tried that formula in the past and it did not work. In 1995, the gentleman from Wisconsin (Mr. Neumann) came with, I think, 72 other new freshmen on the Republican side of the aisle, and we broke the old mold and we created a new mold.

Mr. HOEKSTRA. Mr. Speaker, if the gentleman would yield, I believe this is one of the gentleman's new charts.

Mr. HOEKSTRA. Mr. Speaker, the gentleman from Wisconsin has been working during our recess. But the gentleman is exactly right. Some of us came in 1993 and really believed that we had to control the growth in spending. Actually, the gentleman has other charts, probably back in the office, but they show that if we would have just for a number of years controlled the growth of Federal spending, kept it down to the 2 percent level, grown it at the rate of inflation, we probably would have reached a surplus budget a long time ago. But the people in Washington just could not control their desire to spend. So we went back up to 3.5, 4 percent and there we go. We are working off a big number. When we are talking about increasing spending by 3.5 to 4 percent we are talking not about $100; we are talking about increasing a number that is $1.6 trillion. So the difference between a 2 percent growth rate and a 4 percent growth rate is real money.

Mr. HOEKSTRA. So they are serving two masters. Really the school administrators should be not serving a master but should be working with the parents and the community leaders and their community designing school programs that are most appropriate for the specific needs and the special challenges and the special opportunities for kids in their community. They do not need to be looking to Washington or trying to figure out, you know, this is what Washington wants me to do, but I know this is what we want to do in this community. How do I reconcile these things. They ought to be solely focused on building their schools with their local community leaders and their local parents.

Mr. HOEKSTRA. If the gentleman will yield, because the other destructive thing, you have touched on it, the other destructive thing that happens when we send this money to the local school district, we send it with all the strings attached. We now get school boards, superintendants, and school administrators who serve two masters. They serve the master in Washington who tells them what to do, who does not know where Augusta, Wisconsin does not know whether it is near Green Bay or near Madison or whatever.

Mr. HOEKSTRA. Mr. Speaker, if the gentleman will yield, you know the process that we have gone through. We have held hearings here in Washington to outline, figure out this process. The other thing we did was we went to the local level. We have held hearings in 16 different States. We asked that basic question. We asked them, what value is Washington adding to your educating your kids locally? The answer came back, we like your money, but other than that, you are not doing much for us. As a matter of fact, in some cases, you are hurting us because what is happening is you are sending us some money that we need, and we are spending it the way you are telling us to. But if we really looked at the kids in our classroom, if we looked at the kids in our community and identified what we really wanted to do with that money, we might spend it on something else. So what we are going to do tomorrow with dollars in the classroom is two things. We are going to not increase Washington spending, but what we are proposing is saying, instead of 60 to 70 cents of every dollar getting back to the classroom, let us get that to 95 cents of every dollar getting back to the classroom. That is a 25 percent increase in Federal spending without us spending anymore because we are just being more effective and more efficient in how we get that money down there.

Mr. HOEKSTRA. Mr. Speaker, would the gentleman yield?

Mr. HOEKSTRA. Mr. Speaker, I believe the gentleman said it passed by a single solitary Republican vote.