Jim Kolbe

Mr. KOLBE

Mr. KOLBE. I have been advised that staff did consult with the staff of the gentleman from Missouri [Mr. Gephardt] on this.

Mr. KOLBE

Mr. KOLBE. Mr. Speaker, I wanted to take this time today to address the House on a recent crisis that occurred in Mexico. I have not had an opportunity to do it before now, and there has been an awful lot of information and misinformation that has been stated in news media, the floor of this House, by a lot of speakers all over the country, and for that matter, the world. Let me begin with this observation: What we saw in Mexico I think was a great liquidity crisis, and it was the first one to result from mutual fund redemptions, as opposed to the operation of central banks. Mutual funds determine their values minute by minute with each and every transaction, so they are vulnerable to very small market ticks which can result in very large scale losses and redemptions. Banks, on the other hand, report their earnings quarterly. They have wide latitude to hold on to nonperforming loans in their portfolios. This is an important distinction and one which will affect us in the future, because today mutual funds have 90 percent, as much on deposit, as banks do, while only 12 or 14 years ago it was 10 percent of what banks had on deposit. The bottom line is this: Mutual and pension funds drive the financial markets today. Because of this distinction, the crisis was fundamentally different from the ones we have witnessed before in developing countries, including Mexico. What would have happened if we had taken no action to meet this stated $40 billion loan commitment that the President and the leadership in this House and Senate gave a few weeks ago? We do not know for sure what might have happened, but there are some facts we do know. First of all, Mexican reserves were at a perilously low level, and they simply would not have been sufficient to cover the redemption of the treasury bonds called tesobonos. Since loss of confidence had eroded any chance to roll these notes over at virtually any price, the government was resorting to printing pesos to redeem the bonds as they came due. The holders of those bonds were converting them very quickly to dollars, so that resulted in further loss as the peso deteriorated. Unless checked, this combination of events was certain to lead to high inflation and very, very deep recession. As if these problems were not enough, Mexican private banks were seriously at risk as well. With interest rates soaring to offer 50 percent levels, debtors were simply unable to repay in the short-term. Nonperforming bank loans would have skyrocketed within the Mexican financial system. Widespread bank failures would have been almost inevitable. The social and political consequences for the United States resulting from such a collapse in the Mexican economy are not too difficult to imagine. Certainly we would have seen the loss of U.S. jobs stemming from the inability of our second largest market to buy our exports, and we would have seen a significant increase in illegal immigration. Indeed, some of that is likely to happen because of the contraction that we have seen in the Mexican economy. That has already occurred. But the results of a total collapse could have been catastrophic and impossible to reverse in the short term. It is clear to me that it is in our national interest, our national security and our national economic interest to have a prosperous and stable neighbor on our 2,000-mile common border. By the end of this year Mexico will have a population of at least 90 million people with a growth of 2 percent a year. With 50 percent of the population under the age of 20 and 25 percent over the age of 56, the Mexican job market over the short and medium term must continue to expand to provide jobs to a very competitive Mexican youth who are coming of age. In addition, 700,000 jobs here in the United States are directly tied to the exports we have to Mexico. If only Mexico had been at risk in this, it is possible we could have ridden out the crisis, although even then with apparent that this crisis was spreading like a huge ink blot across world financial markets and in particular among the emerging markets, it became clear that the economic and national security costs of U.S. inaction were going to be much higher than the risks associated with action. The collapse in Mexico would have adversely affected our ability to continue steering developing countries on a path to free markets and democratization. Mexico has been viewed as a litmus test for the success or failure in our model of development. It is the largest of the emerging markets, the only one to have joined the 15-member OECD. That this should happen to an OECD country would have been unthinkable just a few months ago. Second, Mexico has been held up as a model for other developing countries with its privatization, democratization, deregulation, and free-trade orientation. The United States, the OECD, and the IMF have been very public in urging other countries to follow this model. So Mexico's problems become the problems for everyone else. Finally, let me just speak about the legality of the action. There is no doubt in my mind that the President's actions were within his authority under the law governing the use of the economic stabilization fund. Mr. Speaker, the President acted when he had to act. The leadership of this body was correct in supporting that action. It is important, not only the legal correctness of the President's action, but its policy sensibility.

Mr. KOLBE

Mr. KOLBE. Mr. Speaker, more and more people across this Nation are voicing their vehement opposition to the Federal Government's continued intrusion upon their individual rights. Leading this authoritarian onslaught upon the public are the cumbersome and often frivolous regulatory actions that have become part of our environmental policy. These regulations have become so pernicious that they actually prevent any sensible or rational This does not, however, have to be the case. The following article by a Tucson, AZ resident, Mr. Hugh Holub, illustrates the absurdity of some of these regulations. But Mr. Holub also touches upon a key element to any prudent environmental strategy: That we must have confidence in and trust the local people to protect the environment in which they live. The article appeared in the Tucson Citizen on January 30, 1995. FEDS Should Let States Handle Environmental Issues (By Hugh Holub) The rapidly spreading revolt against federal environmental regulation being led by state governors such as Fife Symington is not an attempt to degrade our environment. State and local governments are seeking the opportunity to prioritize risks so limited financial resources can be applied to obtain the maximum public benefit, and to fashion their own ways to accomplish environmental goals without being told how to do it by Washington. The greatest threat to our environment today is not the Republican Congress, or state governors fed up with unfunded federal mandates. The greatest threat is the federal regulatory system itself, which has lost sight of the relationship between cause and effect, which bases regulatory mandates on junk science, which ignores the human and economic consequences of regulatory mandates, and which increasingly demands specific actions that strain the credibility and pocketbooks of the public. The Endangered Species Act is probably the most controversial expression of federal power yet devised in Washington. Recently, the U.S. Fish and Wildlife Service proposed the listing of the pygmy owl as an endangered species, and proposed various urban rivers in Phoenix and Tucson as ``habitat recovery areas.'' Included as a ``habitat recovery'' area in Tucson is the Santa Cruz River flood plain from the I-19 bridge to the Avra Valley Road bridge. What this means is that federal mandates will follow, if the pygmy owl is listed, to prevent groundwater pumping in Phoenix and Tucson and the restoration of riparian forests along the Salt and Santa Cruz Rivers. Since the time of the Hohokam Indians, there probably hasn't been a riparian area along the Salt and Santa Cruz rivers through Phoenix and Tucson because the rivers were diverted for agricultural uses and the flood plains were irrigated. However, since these rivers theoretically could become habitats for the owls, the federal government claims the authority to make us re- create habitat for the owls, notwithstanding the absurdity of the goal, and the cost. It is also very arguable that there is no credible scientific evidence that pygmy owls normally lived in these areas, at least according to the Arizona Game and Fish Department. Since the listing argument is based on the need for forests to provide nesting sites for the owls, it is conveniently ignored that there are more trees on the valley floors of the Salt River valley and the Santa Cruz River valley today than since the end of the last ice age. However, these trees are on residential lots, in city parks, and around commercial and industrial properties and thus aren't ``natural.'' The U.S. Fish and Wildlife Service has, by their interpretation of the Endangered Species Act, the power to play God, and restore habitats for what they believe to be endangered. There is obviously a not so hidden agenda with the pygmy owl listing, as the target really is to usurp state water law. One of the elements of the habitat recovery program is the limitation of groundwater pumping in the valleys of the Salt and Santa Cruz rivers. All of this conveniently ignores--at least in the Tucson area--recent changes to Pima County's flood control laws to protect riparian areas, and serious proposals to restore river flows with CAP water for recharge projects. According to one of the advocates of the listing of the pygmy owl, protecting this owl under the Endangered Species Act is the last, best chance to save the owl. Like the state and local governments can't qqqdo more and better to restore riparian areas without having the Endangered Species Act used as a club to beat Arizona's management of water into submission. The message to be gleaned from the growing conflict over federal environmental regulation is that while the overwhelming majority of Americans support protection of the environment, we do not want to sacrifice our homes and our jobs to federal environmental mandates. We want a balance--a win-win solution. We want environmental protection and economic prosperity. We haven't been able to get that from the federal level of government. Besides being governor of the state of Arizona, Fife Symington is also a serious trout fisherman. He shares a brotherhood and sisterhood of people who really go out into the environment, and who appreciate the spiritual value wild places give us. Symington is every bit as much an environmentalist as any federal official. The salient difference, which is the bedrock of the revolution that is growing in America today, is that Fife and a lot of people such as him--Republican and Democrat--have confidence in local people being able to protect the environments they live in and depend on without someone in Washington telling them how to do it.

Mr. KOLBE

Mr. KOLBE. Mr. Speaker, I rise today with my colleague, Congressman Knollenberg, to introduce the Common Sense Welfare Reform Act. We believe it is not only possible, but sensible, to turn the administration of the welfare system over to the State capitals and the city halls. Block granting social programs to the States is a first step in reform of the welfare system. This flexibility is critical to allowing States to test assistance programs best suited to their needs. Common sense tells us that a successful program in rural Arizona may not necessarily work in Detroit, MI. We believe, however, that the debate should be taken a step further-- and that is why we are introducing the Common Sense Welfare Reform Act. If States can better administer welfare programs, shouldn't it follow that citizens know best which programs work in their communities and which are the most cost-effective? That's what our legislation is about--a partnership of State and local entities with individual taxpayers. The common sense welfare reform bill will give the people that pay the bills and provide the services in the community a role in how poverty relief efforts are structured. The Common Sense Welfare Reform Act consolidates over 60 overlapping, inefficient programs run by the Federal Government and gives the money directly to the States in block grant form. That's a direction in which the House is moving and is a necessary precondition to making our welfare privatization proposal work. Our proposal allows taxpayers to contribute up to 10 percent--not to exceed $2,500--of their Federal income taxes to qualified private charities in their State in return for a dollar-for-dollar tax credit. This tax credit is paid for by corresponding reductions in the block grant to the State in which the taxpayer lives. The Common Sense Welfare Reform Act serves two purposes by empowering taxpayers to participate in the funding decisions for poverty-relief services. First, we give taxpayers a voice in how services are delivered in their communities. We have faith in the ability of individuals who are in the communities to know what is working well. The Federal Government--or State governments, for that matter--should not have a monopoly on where welfare dollars are allocated. Critics of block grants contend that many States do not have a good track record in administering social programs. Our proposal, however, diffuses the concentration of authority over spending on poverty-relief efforts by leveling the playing field on which private and public charities compete. The Common Sense Welfare Reform Act allows taxpayers to determine where their poverty-relief dollars are spent the most effectively. Second, we reward private charities for doing what they have traditionally done best, and that is to provide prompt, temporary assistance. Private charities view assistance as a tool by which to change behavior--it is not a right nor a way of life. Because of this philosophy, both in theory and in practice, it is inconceivable that a family would subsist for generations on the local soup kitchen, food bank or shelter. Private charities stress personal responsibility and provide hands-on management for recipients. The humanizing aspect of private charities is missing from the impersonal public welfare bureaucracy which requires nothing from the recipient except eligibility for aid. Americans need to become personally involved in reforming the welfare system. If I may be so immodest, I would suggest that Congressman Knollenberg and I have a bold and innovative approach in the Common Sense Welfare Reform Act to allow Americans to do just that. We hope the momentum in the welfare debate will take our deliberations a step further. Let's allow taxpayers a role in providing assistance, while giving private charities the opportunity to compete for welfare dollars in a true, competitive atmosphere, instead of making their funding a function of who has the best grant writer or the best connections in Washington--or Lansing or Tallahassee.

Mr. KOLBE

Mr. KOLBE. Mr. Speaker, I appreciate the gentleman from Missouri yielding to me. I did have the opportunity this morning to attend my first meeting as a member of the Page Board, and it is a great honor for me as one who began his service back here as a page too many years ago. We will not mention the particular year. But Donn Anderson, Ron Lasch, and I all graduated from the page school. I just wanted to join with my colleagues in saying to the young men and leaving, some of whom will be staying with us for their second semester and the rest of this session of Congress, or this first part of this session of Congress, that you had an extraordinary experience, and I think you probably all recognize that. As I look back on the experience myself, I think back to things that have had a formulative part, been a formulative part, of my life, and I think non has been more important that the experience that I had here as a page. In terms of giving me an appreciation for how the American Government works and an appreciation for the political process and a better understanding of those who serve us in Government, that they are humans, they are good, and some are bad, and some are indifferent, but they are humans in every single way, and I think that perhaps more than anything else that I took away from that experience it was that. I hope as you go back to your States and to your communities you will try to convey that to the young men and women that you will be in school with this year and next year and on into college, that there is so much that we are fortunate to have in our country, so much in our Government that is good, and that it is so important for all of us to participate in that. You have been given a rare opportunity that very few young men and women have in their lifetimes, to be a part of this, not just to observe, but to actually be a part of this process, and I know that you will take away from it a great deal. The test is really how you will use this in the future and to what good you will put it. It does not have to be in government. You can put it to good use whether you are in medicine, whether you go into law enforcement or business or whatever career you might be in. But I suspect that this is an experience you will find later in life will be one of those defining moments for you. So take that message back and think about what you have learned here and how you can put it to use. I will make this prediction, Mr. Speaker, and my chairman of the Page Board, my colleague, at least one or two of these people will be back among us one day, probably after we are gone, but back among us one day as Members of this body. I wish you all very well, God bless you. Thank you.