Mark Kirk

Mr. KIRK

Mr. KIRK. Mr. Chairman, I thank the distinguished chairman and the ranking minority member for their strong leadership. As a former staffer, the construction of a staff gym is one I am very proud to see move forward. Congress spends a lot of money each year on programs to promote physical fitness and to fight obesity. Finally, the Congress is doing that right here. This legislation includes a $3 million fund for the construction of a staff gym located in the Rayburn garage. Along with my colleague, the gentleman from Illinois (Mr. LaHood), who has advocated this for so long, we have finally begun the process of the construction of a staff health and fitness center because it is time to give our staffs the same opportunities that Members have right here. We employ over 17,000 people in the legislative branch. Any employer of that size in Chicago would have long provided such facilities to their employees. The staff gym gives men and women who serve here in the House the opportunity to be fitter and be able to better handle the stress of their jobs, handling the long hours and under sometimes low- paying conditions working for our constituents. I want to thank the subcommittee staff, especially Liz Dawson for her work in making this a reality. During the subcommittee markup, another issue was addressed to halt funding for the Capitol Police mounted horse unit. I offered an amendment to deny funding because of fiscal constraints in the face of security threats. It is imperative that we invest funds in protecting the Capitol and spend them wisely. I applaud the Capitol Police for their cooperative work with law enforcement agencies to minimize the threat but do not believe that investing taxpayer dollars in 18th century technology represents fiscal responsibility. We should not fund a program that has so many unresolved issues. A perfect example is the issue of quartering horses on the Capitol grounds. Last year, the committee was told the horses would be using Park Police stables on the far side of the mall. At very little expense, they were supposed to be housed close to the Capitol complex. However, that is not happening. Currently, the Capitol Police horses are stabled at a Bureau of Land Management facility on Gunston Road in Lorton, Virginia, 1 hour's drive with trailers from the Capitol. The Architect of the Capitol does not have a current cost estimate for constructing a stable or handling manure on the new location, but the K-9 kennel construction cost over $1 million, and one could easily hazard a guess that horse stables would cost even more than the K-9 facility that we have built. If the program continues, Congress would have to pay for use of the BLM facilities or constructing an entirely new horse stables and waste disposal system at taxpayer expense. By blocking funding for a new mounted unit, the committee has taken the action to save taxpayers approximately $1.8 million over the next 10 years. Mr. Chairman, I urge adoption of this legislation. I thank the ranking minority member and the chairman for their work on this legislation.

Mr. KIRK

Mr. KIRK. Mr. Speaker, on July 9, 2004, I missed rollcall vote No. 354, the motion to recommit for H.R. 2828. I missed the vote due to a meeting I had with the President of the World Bank. Had I been present I would have voted ``no.''

Mr. KIRK

Mr. KIRK. Mr. Chairman, I yield myself such time as I may consume. We have an argument here. One side urges spending restraint and the other side urges higher taxes. I lean toward spending restraint and believe that Americans are taxed enough. This Congress was run by the other party in the 1980s and we raised taxes back then. But spending went up even faster than we raised taxes. We remember in the 1980s that for every $1 in taxes raised, the Congress lifted spending by $1.24. Therefore, taxes went up and so did the deficit. Ask your seniors this question. Should we cut other programs to make sure that we have $445 billion to help protect Social Security? The gentleman asks, what commitment is there by the United States Government to make sure that these savings go to Social Security and Medicare? As I referred to in my opening, we have an unfunded liability in Medicare of $21 trillion, and we have an unfunded liability in Social Security of $10 trillion. There is a sacred bond and a piece of paper from the Treasury Department to the Social Security Administration that says that the American taxpayer will honor these debts. But with what money? Ask seniors this question: Should we cut entitlement spending to make sure that the money is there for Social Security and Medicare? Should we make sure that their basic retirement security and their basic health care program has the money it needs to cover those sacred promises? As I said before, we made two sacred promises to the people of the United States: one, that we would provide for the common defense. We made that promise in 1776. And, two, that we would protect at a minimum level their retirement security. But as I said, we are $21 trillion in the hole on Medicare and $10 trillion in the hole on Social Security. To honor those commitments, we have got to restrain spending. We have got to make sure that we have the money available to protect America's seniors, and with that I urge adoption of the substitute. Mr. Chairman, I yield back the balance of my time.

Mr. KIRK. Mr. Chairman, reclaiming my time, absolutely. You can imagine CBO analysts are somewhat reticent for us to formally go back and see how their estimates varied. I urge adoption of the amendment.

Mr. KIRK. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I would urge adoption of the amendment. You can imagine CBO analysts do not exactly want to be forced to go back and compare exactly how actual performance deviated from the estimate that they provided.

Mr. KIRK. Mr. Chairman, I yield such time as he may consume to the gentleman from Iowa (Mr. Nussle), my distinguished chairman.

Mr. KIRK. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, we have all heard of forecasting to estimate future spending by our government. Our experience with forecasting the cost of entitlement spending shows wild inaccuracies. A classic example comes from forecasts we used on the spending under a new entitlement program to care for patients suffering from kidney failure. Under estimates before our Congress, Representatives were told 90,000 patients would enroll for taxpayer-funded dialysis by 1995. 90,000 patients enrolled in this new Federal entitlement program by 1985, 10 years earlier than expected. By 1995, there were 239,000 patients in the program, not the 90,000 estimated. Today, in fact, there are 400,000 patients in this program, so spending is wildly above that which was estimated when the program was voted on before this House. My point with the amendment before us is simple: we need better forecasts before we change or improve entitlement spending programs. We would do that if we started a process which every budget analyst fears, and that is called backcasting. Backcasting by the Congressional Budget Office would require analysts to look at the actual spending over the previous year, with an eye to reviewing the actual errors they made in the estimates used the previous year. Backcasting would give our budget analysts a grade. It would show the Congress clearly where actual spending of a program differed from the assumptions used in the previous forecast. Backcasting is now a standard procedure used in nearly every investment house on Wall Street, and every American family with an IRA reviews the estimates of promised performance by their mutual funds and then compares it to what actually happened with their retirement nest egg. I think it is about time we use this time-tested procedure to improve estimates used to prepare our budget using a rigorous analysis, comparing our previous estimates and the errors made compared to our actual budget experience. This amendment comes just in time for the budget history of the United States. Right now, over 60 percent of our budget is spent through entitlement spending. Soon 70 percent of the budget will be spent in entitlement spending. This means that the estimates we use to set benefits and beneficiaries are not just important; they are crucial to the long-term financial strength of the United States. We make vital promises to America's seniors. We must use advanced forecasting and backcasting to make sure that the promises we make to America's seniors are promises that taxpayers can afford to keep. I appreciate the support of the gentleman from Iowa (Chairman Nussle) on this amendment and the lack of opposition from our senior, very distinguished ranking Democratic member on this. Mr. Chairman, I reserve the balance of my time.

Mr. KIRK. Mr. Chairman, I offer an amendment.

Mr. KIRK. Mr. Chairman, I demand a recorded vote.

Mr. KIRK. Mr. Chairman, I do want to commend the gentleman for a very trying and difficult debate. But this was one of the few times in the Congress where we did not have a scripted debate. This was one of the few times where we did not know how the votes would turn out. And the American people have seen that we are now wrestling with a very difficult problem of how to bring spending under control so that we meet the commitments to Social Security, to Medicare, to the Nation's defense that we have already made.

Mr. KIRK. Mr. Chairman, will the gentleman yield?

Mr. KIRK. Mr. Chairman, I yield 1 minute to the gentlewoman from Pennsylvania (Ms. Hart).

Mr. KIRK. Mr. Chairman, I yield 4 minutes to the gentleman from Delaware (Mr. Castle), the chairman of the moderate Republican Tuesday Group.

Mr. KIRK. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I urge support for the Republican Consensus Budget Substitute. In sum, the consensus substitute saves $445 billion to help protect Social Security and Medicare. This substitute includes 10 consensus principles that help restrain spending and make it difficult to create new government programs. It represents the work of the Conservative Republican Study Committee and the Moderate Republican Tuesday Group to put spending restraint as a core value of this Congress. We know that Medicare's unfunded liability is in the red $21 trillion. We know that Social Security's unfunded liability is in the red $10 trillion. In just 5 years, the first baby boomers will start collecting Social Security checks. The number of people collecting Social Security checks will then climb from 40 million Americans to 80 million Americans. To honor our commitment to Social Security and Medicare, we must restrain spending on other programs. Our substitute would cut the growth of other entitlement programs by $445 billion, saving that to meet our Social Security and Medicare commitments. Now, the Federal Government has made two important promises to the American people: one, to provide for the common defense; and, two, to ensure some retirement security. To honor those expensive financial commitments, we must hold back spending on other programs to keep those promises. In this substitute, we do some things, and we do not do other things. We do not cut Social Security and Medicare. We do honor our commitment to America's retirement security. And we have other reforms. Ten reforms. They are: a rainy day fund for emergencies, so that we stop our process of emergency appropriations outside the budget. We have baselines without automatic spending increase inflation adjustments, to begin to slow down the process of spending. We have annual caps to make sure that we can keep track of the actual budget targets we set. We have spending controls, automatic reductions, in non-Social Security, non-Medicare accounts to make sure that a budget we pass is one that we actually keep. We keep promises to seniors by ensuring that Social Security and Medicare are not cut and have additional resources at the government's command to make sure that those programs are strengthened. We have enhanced rescission protections to make sure that the President would be able to eliminate pork barrel spending projects, like greenhouses in Iowa. We would be able to also focus on government inefficiencies with a new bipartisan commission. We would be able to have proper accounting of long-term liability through accrual accounting. We also have a clear showing of the Federal debt through more transparent reforms. And, lastly, we maintain our fiscal discipline by making sure pay-as- you-go rules apply to entitlement spending. Now, many criticize this effort, because while we do not touch Social Security or Medicare, we do hold other spending to the rate of inflation. Some say we must allow government spending to grow much faster than inflation. But if spending grows faster than taxes, we will run out of money; and every senior knows that. Even Senator Kerry does not agree with the Center on Budget and Policy Priorities. They say that we cannot slow health care costs. But Senator Kerry disagrees. And in his latest TV ad he says the following, and I quote: ``We spend about $1.5 trillion every year on health care in America. $350 billion of that has nothing to do with care. It is all paperwork. We will literally save billions of dollars in health care costs in America by becoming more streamlined and more efficient.'' And he could not be more right. Ask your seniors a question: Should we cut other entitlement programs so that $445 billion can go to protect Social Security and Medicare? Our seniors are savvy citizens. They know that spending in other programs threatens the long-term future of Social Security and Medicare, and they know that the retirement of the baby boom means that we will need to cut other programs to protect Social Security and Medicare. Mr. Chairman, I urge adoption of the substitute. Mr. Chairman, I reserve the balance of my time.

Mr. KIRK. Mr. Chairman, I offer an amendment in the nature of a substitute.

Mr. KIRK. Mr. Chairman, I demand a recorded vote.

Mr. KIRK

Mr. KIRK. Mr. Speaker, today, I missed rollcall vote number 303: H. Res. 692, to provide consideration of H.R. 4663. Had I been present I would have voted ``yea'' on this vote.

Mr. KIRK

Mr. KIRK. Mr. Speaker, over 22 years ago, Paul T. McCarthy became the Village Manager of Glenview, IL, located in my Congressional District. Since that time, Mr. McCarthy has played the leading role in the development of one of suburban Chicago's most prosperous communities. Upon arriving in Glenview, Mr. McCarthy embarked upon an ambitious program to attract businesses and residents to the community. One of his first projects was to improve the bond rating of the Village as an incentive to investors and capital. Within 8 years, Glenview had achieved Moody's highest bond rating of AAA. It has maintained that rating ever since. With this strong financial foundation, Mr. McCarthy began to implement his vision for the Village. In 1990, he negotiated the Willow Road Corridor Agreement between Glenview and Northbrook. In 1997, he negotiated the purchase of the privately-owned water company, North Suburban Public Utilities. He also oversaw the closing of the Lutter/ Krohn landfill and its redevelopment as a golf course. These 3 initiatives, along with numerous other projects, had tangible, beneficial affects upon Glenview residents and were the direct result of Mr. McCarthy's leadership and vision. Mr. McCarthy's biggest challenge was ahead of him. In the second or third round of military base closings, the massive Glenview Naval Air Station was shut down, opening up thousands of prime real estate acres for development. Mr. McCarthy led the development of this area with extraordinary success. The Glen, as the area is now known, has become a nationally recognized and award winning mixed use development, representing $1 billion in public and private investment. In his 22 years of service, Mr. McCarthy has led the Village of Glenview with tremendous foresight and success. When he entered city hall as Village Manager, Glenview had a budget of $15.4 million and 180 employees. As Mr. McCarthy retires, the Glenview budget is $80.7 million and the Village employs 320 individuals. Mr. McCarthy's leadership as Village Manager of Glenview, IL, is worthy of the highest commendation. I wish him and his wife much happiness in retirement. Mr. Speaker, I hope my colleagues will join me in recognizing this extraordinary individual.

Mr. KIRK

Mr. KIRK. Mr. Speaker, earlier today, I missed rollcall vote No. 290, H. Con. Res. 460, regarding the security of Israel and the principles of peace in the Middle East. As a strong supporter of the state of Israel had I been present I would have voted ``yea''.

Mr. KIRK

Mr. KIRK. Mr. Chairman, I rise in support of the Simmons amendment. Unlike some other amendments in this bill that are offered for partisan advantage, this amendment is offered by a former CIA officer with detailed knowledge of how the U.S. intelligence community works. To my knowledge, there are only three current Members of Congress who work with the CIA: our chairman, the gentleman from Florida (Mr. Goss), the author of this amendment; the gentleman from Connecticut (Mr. Simmons); and me, who is detailed to the CIA from navy intelligence. This amendment seeks to change our intelligence culture to become more effective in the age of the Internet. Today, every two-bit terror organization in the world has a Web site broadcasting information on its activities. Internet news, political parties, and foreign government sites all offer new material to our intelligence community. For years in the cold war, our enemies collected open-source data on us, but we were forced to collect secret data on them. That is now changing. There is a wealth of open-source data on our adversaries. Every analyst in the community should be encouraged to use as much current and accurate open-source data as possible; and I applaud the gentleman, who knows the CIA so well, for offering this amendment to keep our culture up to date with the current technology.

Mr. KIRK

Mr. KIRK. Reclaiming my time, they did not, but that was not the point of the attack. The point of the attack, as I will go into, is always returning to the same targets, as it has in Kenya, as it has in Sudan, as it has in Tanzania. Once the U.S. Marines and Army Special Forces overran the al Qaeda offices in Afghanistan at Tarnak Farms, we got a clear picture of what the terrorists target. We all know that Osama bin Laden struck the World Trade Center in 1993 and then struck it again in 2001. As one political party holds its convention in New York City in 2004, we know it is a target again. We cannot let homeland defense dollars be spent where there is no perceivable threat. We do not have enough funding to fortify the whole country; therefore we must be guided by the intelligence. If the intelligence showed that al Qaeda consistently targets Wyoming or Mississippi, then that is where the funding should be directed. But it does not show that. It shows that the targets are places consistently mentioned by Osama bin Laden and his lieutenants which are known to him in Afghanistan and Pakistan. These targets, over and over again, are New York, Washington, Chicago, Seattle, and other key sites regularly mentioned by al Qaeda. If we use the funding in this bill to fortify the wrong parts of this Nation, then we will be weak where we should have been strong. If we fortify the right places of our country, then we will blunt their attack, and we will protect the American people. I believe the intelligence should guide this funding, and I urge support of the amendment.

Mr. KIRK. I yield to the gentleman from Kentucky.

Mr. KIRK. Mr. Chairman, I rise to strike the requisite number of words. Mr. Chairman, I rise not as a New Yorker, but as a Midwesterner and as someone with 16 years' experience in the intelligence community; and I rise to reluctantly support this amendment because it stands for the principle that our homeland defense dollars should be allocated against the threat and not allocated by State. Our intelligence against al Qaeda should guide where we deploy these defenses. In point of fact, many States have never been mentioned by al Qaeda or any other major terrorist organizations, but other targets are always mentioned: New York City, the Seattle Space Needle, the Sears Tower, nuclear reactors in the United States, the largest airports, and, of course, the White House, the Capitol and the Pentagon.

Mr. KIRK. Reclaiming my time, I worry that that process will be too slow, and that Osama bin Laden does not see this country as big State versus small State; Osama bin Laden does not see this country as urban versus rural. He knows of a few big targets. From his cave looking at the TV pictures, he has identified those targets; and we need to let our funding be guided to defending those targets so we can blunt the attack.

Mr. KIRK

Mr. KIRK. Mr. Speaker, ``China is a sleeping giant. Let her lie and sleep, for when she awakens, she will astonish the world,'' wrote Napoleon Bonaparte. I would like to title this speech ``The Case for a Special Relationship With China.'' Great nations almost always miss important changes outside their world. Such errors threaten their future in ways they never dreamed. History also has examples of leaders who saw challenges early and responded well. The leaders of Great Britain's late empire entirely missed the rise of the United States. Britain suffered years of combat in World Wars I and II before their American allies joined the fight. During both wars, the British Empire teetered in the balance. Conversely, President Truman wisely perceived his challenge in the Soviet Union and responded well. His actions contributed mightily to the winning of the Cold War. In the 19th century, not everyone missed the rise of the United States. As early as 1835, Alexander de Tocqueville saw in the future clearly when he wrote, ``Americans are already able to make their flag respected. In a few years, they will be able to make it feared.'' Looking from Westminster across the Thames River in 1870, the British Empire's leaders did not share de Tocqueville's view. It was an easy mistake for them to make. Queen Victoria presided over the largest economic block on Earth. In the glare of an empire where the sun never set, her ministers largely ignored the significance of their American cousins. Well-schooled leaders of the Foreign and Commonwealth Office were distracted by a number of small wars at the fringe of their empire, Abyssinia, South Africa, Egypt and Sudan, to name a few. In 1868, The Illustrated London News warned, ``We can ill afford a perpetual succession of little wars,'' but few took notice. European continental leaders were equally unaware of the American change that was under way in their century. German Chancellor Bismarck discounted the United States when he wrote, ``There is a providence that protects fools, drunkards, children and the United States of America.'' After only one single Victorian generation, America's economy grew to be twice the size of Britain's. By 1900, many of the British Empire's leaders dimly perceived the threat from Germany but remained unaware of how their world had changed across the Atlantic. It was hard for many leaders to take America seriously when Belgium's Armed Forces outnumbered the U.S. Army. As a result of their ignorance, England's leaders entered the First World War without the backing of the American arsenal. In 3 short years, from 1914 to 1917, they exhausted the wealth of the empire. Finally, America joined the allies of World War I, but only on President Wilson's terms. It took British leaders two generations of conflict to understand how important America had become to them. Today, London's policy towards the United States is rightfully called the ``special relationship.'' Are there changes under way which call for American attention? Could the leaders of America's foreign policy make a similar mistake? In our vision of America's future, are there any countries deserving another special relationship? Our history is filled with examples of countries where economic growth rapidly turned into political and military power. The rise of Japan, Germany and even some Gulf states show that economic expansion has an inevitable political and military impact. For the United States to be effective in foreign policy, the President needs advisers who see the world not just as it is but as it will become. When the White House advisers fail to outline strategic change, they doom our President to using short-term expedience to cope with a long-term threat. With a clear strategic view, the advisers of President Truman served our country well. Writing his famous long telegram from the rubble of 1946 Moscow, U.S. Foreign Service Officer George Kennan correctly outlined the emerging threat from the Soviet Union. By removing President Roosevelt's friendly ``Uncle Joe'' veneer from Stalin, George Kennan warned his President clearly about the coming Cold War. The Soviet Union, in his view, was becoming a colossus, demanding more than short-term American expedience. The struggle between East and West could only be won with a strategic plan by the West. Truman's answer to the challenge of the Cold War was massive. He backed his short-term military defense of South Korea with a long-term set of new institutions: the Marshall Plan, the Central Intelligence Agency, the North Atlantic Treaty Organization, the World Bank, the Strategic Air Command, the United Nations and the Voice of America, to name a few. After four decades of struggle, the East abandoned the Berlin Wall. In the heady days after communism's fall, many felt the U.S. stood unopposed at the dawn of a new Pax Americana. Francis Fujiyama asked in the Washington Post, ``is this the end of history?'' History hardly ended, but the idea of American supremacy is now strong. America's Armed Forces won stunning victories: 1991 in Kuwait, 1995 in Bosnia, 1999 in Kosovo and 2003 in Iraq. Who can challenge America? Despite our ascendency, we must ask the question, is there a major change in the world for which the U.S. should prepare? As Truman did in the 1940s, should the United States create institutions that respond to this change? The American view of foreign policy has more to do with our European past than our Asian present. By a two-to-one margin, Americans believe that our policy towards Europe is more important than Asia, but our trade with Asia surpassed Europe a generation ago. Today, American trade with Asia totals 50 percent more than our trade with Europe. The U.S. State Department has just 579 full-time Americans stationed in Asia, compared to over 1,300 in Europe and the countries of the former Soviet Union. Asian economies are both larger and growing faster than Europe. Beyond the Asian Tigers of South Korea, Taiwan, Hong Kong and Singapore, the growth rates of China and India clearly show that most of our history in the 21st century will be written in Asia. One country looms large across the future of the United States, China. China's absence from the first rank of world powers is a historical anomaly. Throughout recorded history, the Chinese people were responsible for many of the advances of modern society: paper, gunpowder, even spaghetti. Seventy years before Columbus, China's famous explorer, Admiral Cheng Ho, mapped much of the Arab world from a ship that was twice the size of the Santa Maria. But for the Emperor's decision to recall the fleet, China would have discovered Europe, not the other way around. As recently as the 1830s, China produced one-third of the Earth's wealth. Most of her advances and talent were squandered by corrupt governments, wars and a Chinese dictatorship. Despite a massive population and storied culture, China declined into socialist poverty. Under Mao, the Chinese people lost two generations of progress and were home to the worst famine of the 20th century. But following Mao Zedong's death, Deng Xiaoping led a Chinese economic reform of historic proportions. It is very difficult for many Americans today to understand the breadth and scope of this historic change. When we accurately look at today's China, we note it produces more steel than the United States, consumes twice the grain of the United States, has built highways twice the length of Germany and France combined, graduates three times the number of engineers as India, and is home to over 200 million cable TV subscribers. It replaced Mexico as America's number two trading partner, and it replaced America as Japan's number one trading partner. There are 200 cities with populations over 1 million, and the economy doubles every 8 years. We now estimate that its economy will be larger than the United States in the next decade. China is not only growing year to year, it has sustained a growth rate of over 9 percent annually for a generation. Given the difference in price of many domestic goods in China, economists now debate how to measure the size of the Chinese economy, using a traditional gross domestic product or a more up-to-date purchasing power parity to take into account the lower cost of Chinese domestic goods. Either way, the effect of China's sustained growth has profound proportions. Under a GDP measurement, the United States economy now stands at $11 trillion, whereas China's economy stands at only $1.5 trillion; but using purchasing power parities, our $11 trillion economy stands next to China's $7 trillion economy. Using purchasing power measurements, the International Monetary Fund projects China will be home to the world's largest economy as early as 2007, during the next American President's administration. Koishi Ishiyama recently wrote that China's rise can be compared to the Shock and Awe operation in Iraq. Foreign direct investment did not significantly exist in China before 1980, and while such investment in all other developing countries fell in 2002, it rose by 15 percent in China, netting $52 billion in new investments. The pace of China's growth is also accelerating. In the next 10 years, the City of Beijing will double its supply of housing. The Chinese highway system and the number of cable TV subscribers will also double in size. While this change is dimly seen in official Washington, it is having a profound effect on the Chinese people. China's hosting of the 2008 Olympic games will be one of many upcoming international events in China. China last year became the third country on Earth to orbit a human in one of its own space vehicles. Next year, China plans to orbit a two-man vehicle, the Shenzhou VI, on its way to building its own space station and lunar rover. China's progress can be overstated. Over 200 million Chinese still live on less than $1 a day. There is a great gap now opening between the poorer western provinces of China and the new-found wealth of China's east coast. Environmental challenges also loom, including over 100 of China's cities with air pollution exceeding the World Health Organization's guidelines for sulfur dioxide. The World Bank's World Development Report still ranks China at number 76 out of 129 countries measured for personal income; and despite progress, the World Bank estimates that Chinese per capita income totals just $1,000 per year. Such low numbers, though, hide profound progress. Between 1978 and 1998, the World Bank estimates the number of poor people in the world fell by 8 million. The number of people who were poor outside China actually rose by 82 million. But the world's total numbers were compensated by the profound reduction in Chinese poverty. From 1978 to 1999, Chinese adult illiteracy fell from 37 percent to 17 percent, while infant mortality dropped from 41 per live births in 1978 to 30 in 1999. Changes in China had an impact on Americans as well. Motorola now employs over 10,000 people in China and owns the country's best- recognized trademark. By last year, over 1,500 U.S. firms invested $25 billion in China. One U.S. corporate executive advised the Congress that his top three issues in Washington were China, China, and China. The story of Wal-Mart shows the profound change that is under way both in China and in the United States. Unlike traditional retailers such as Sears Roebuck or J.C. Penney, Sam Walton recognized the importance of China and the advantage of its lower-cost merchandise. Relying heavily on Chinese suppliers, Wal-Mart grew to become America's largest employer. Selling in nearly every town in America, Wal-Mart doubled its purchases of Chinese goods to $12 billion per year. And last year, Wal-Mart sold 10 percent of everything that China made. In many ways, the face of all-American Wal-Mart is really the face of China, Incorporated. There are many examples of how China's transformation influenced America's private sector. Like British merchant bankers who understood America's rise and bankrolled the Union Pacific Railroad, companies like Boeing, General Electric, Baker MacKenzie, and hundreds of other U.S. private sector interests understand what is happening and are risking a great deal to capitalize on the opportunities presented by the rise of China. But this understanding is not well understood by America's government. Like their British Government forefathers that missed America's rise, there is little evidence that the Federal Government perceives or is moving to realign the world to the rise of China. Many European powers discounted turn-of the-century America and its puny Armed Forces. Many Americans likewise dismissed the capabilities of the People's Liberation Army and its potential to change the course of Asian history. By China's own plan, military modernization ranks fourth in their list of four modernizations. Following the recent victories of America's Armed Forces, the raw size of a country's army is no longer evidence of its future prowess in battle. The People's Liberation Army, numbering 2.4 million, still stands as the world's largest; but it looks anachronistic and unable to enforce the will of China's leaders very far from its borders. A Council on Foreign Relations Task Force under former Secretary of Defense Harold Brown estimated last year that China was ``at least 2 decades behind the United States in terms of military technology and capability.'' According to the Pentagon, Chinese military leaders closely studied NATO's operation over Kosovo and described it as the first ``no-contact'' war. In the post-Cold War world, Deng Xiaoping gave a key directive to the Chinese security establishment based on his ``24-character strategy'' and that was, ``keep cool-headed to observe. Be composed to make reactions. Stand firmly. Hide our capabilities. Bide our time. Never try to take the lead, and be able to accomplish something.'' While seeking short-term opportunities with the United States, the Pentagon reported, ``China's leaders assert the United States seeks to maintain a dominant strategic position while containing the growth of Chinese power, ultimately dividing and Westernizing China.'' Much of China's military budget and plans were influenced by scenes of conflict in the Balkans and Iraq played out on televisions tuned to the 24-hour news channels. After the U.S. victory in Kosovo, China's leaders seriously considered upgrading the fourth-ranked priority they attach to their military. The army developed a new response doctrine called the ``Three Attack and Three Defenses,'' focusing on attacking stealth aircraft, cruise missiles and helicopters, while defending against precision strikes, electronic warfare, and enemy reconnaissance. Chinese Air Force chief of staff Lieutenant General Zheng Shenxia noted that without adopting a preemptive doctrine, the chances of a PLA victory are limited. In November 2002, China overhauled its Politburo Standing Committee, the center of the Chinese Government decision-making. Every member of the politburo was replaced except Hu Jintao. Following this shakeup, senior leaders reaffirmed their emphasis on economic growth, but did increase funding for military modernization. Acknowledging its weakness in the face of such complete U.S. victories, Chinese leaders tempered their sense of vulnerability, knowing that unlike Kosovo, China is a nuclear power. Its 2002 defense White Paper, in contrast to its 2000 White Paper, did not explicitly criticize U.S. deployments in Asia. The main mission of the Chinese military is to fight and win a conflict over Taiwan. In March 2002, Chinese Finance Minister Xiang Huaicheng announced a 17.5 percent increase in its official defense spending. While China reports an official defense budget of approximately $20 billion, its actual spending ranges to twice or three times that level, totaling $45 billion to $67 billion annually. The Department of Defense and the Council on Foreign Relations both estimate that annual spending in real terms could increase three to four-fold over the levels I just quoted by 2020. Most defense modernization spending occurs outside the public defense budget. Chinese military spending in this range roughly equals the $65 billion spent by Russia and dramatically exceeds the $43 billion Japanese defense budget or the $38 billion British military budget. A three-fold increase in spending by China would put their military budget above all other nations, except the United States. China's rising military budget masks a structural problem in its military. Since large armies no longer guarantee success, China has cut the size of her armed forces from 1997 to 2000 by reducing 500,000 men, including 11 percent of her naval personnel, 12 percent of her air force personnel, and 18 percent of her army personnel. Sixty of 100 maneuver divisions were collapsed into the remaining structure of 40 divisions and 40 brigades. The air force retired older aircraft, dropping from over 5,000 aircraft at the end of the 1990s to 3,500 now. Of the remaining aircraft, only 150 are modern fourth-generation fighters. China still regards its military as too ``infantry-heavy'' with an army so large as to ``impede rapid deployment and equipment modernization.'' By reducing the size of the armed forces, China provided funding dedicated to military modernization. The air force is adding advanced SU-30MKK fourth-generation fighter aircraft, AA-12/ADDER active-radar guided air-to-air missiles, and a new SU-30 naval variant capable of carrying air-launched, anti-shipping cruise missiles. The Navy added four SOVREMENNYY-class guided missile destroyers and produced its own new design SONG-class diesel-electric submarines, the first with quieter skewed propellers. It took delivery of four quiet KILO-class diesel-electric submarines and has another eight submarines under contract, all equipped with a new 3M-54E Novator Alpha anti-shipping cruise missile. Given the sum of investment and rapid modernization, China did forgo one important upgrade, and her navy has now shelved plans for its own aircraft carrier. The pace of development accelerated for China's army. The land forces are developing a light tank, an amphibious tank, and an amphibious- armored personnel carrier, all added to over 1,500 type-96 main battle tanks that are already delivered. This kind of new equipment is now flowing to China's revamped three airborne and two marine brigades. The Ministry of Defense now emphasizes recruitment, retention, and more training for officers and key NCOs. Training now emphasizes small- scale specialized maneuvers under the new doctrine of fighting a limited war under high-tech conditions. All infantry divisions now have armor, up from only half in 1997. Since 1989, China has been cut off from most U.S. and European military technology. Its defense establishment cannot innovate as fast as it could if it had access to foreign equipment. China's leaders responded with a foreign policy emphasizing cooperation and good relations with the United States. Over time, such a strategy could reopen their access to key Western technologies, even in the military field. The transformation of China's new military power is clearest in its missile force. China maintains a limited force, including 20 nuclear missiles capable of hitting targets in the United States. A number of U.S. Government agencies project that this rise in the missile force will lift by a factor of three to over 60 missiles capable of striking the United States, using the new CSS-4 Mod 2 ICBM. This Chinese force will be augmented by the brand-new solid-fuel DF-31 ICBM and an entirely new generation of Chinese nuclear submarines, the 094-class, carrying a naval variant of the DF-31. China is also developing two other classes of solid-fuel intercontinental ballistic missiles. It is also developing a heavy-lift space launch vehicle, capable of lifting 25 tons into low orbit by 2007. These developments pale when compared to China's expanding arsenal of medium-range missiles all aimed at Taiwan. China currently has a force of 450 such missiles and is adding 75 each year. Beyond large nuclear additions to China's armed forces, China places a very high priority on information warfare. The PLA believes that the U.S. Department of Defense is too dependent on networks that are vulnerable to attack. By attacking these systems, planners in China's army believe the U.S. forces could be degraded ``anonymously.'' The anonymity of information attacks could play a key role even now. The House of Representatives recently reported regular attempts by computer systems located in China to enter the main computer server of the House Committee on Armed Services. The Pentagon may have referred to this when it recently reported that China ``places unusual emphasis on a host of new information warfare forces instead of information superiority and the system of systems approaches popular in the United States.'' There have been several official references about leveraging China's growing presence on the Internet, including references to a ``people's war'' in ``net warfare'', suggesting a stronger role in nationalist hacking. China also has a commitment to electronic warfare equaled only by the United States. Unlike many countries now totally dependent on U.S. leadership in this exotic field, China is developing electronic jamming aircraft for several variants and may have several programs to develop escort jammers on transports, tactical aircraft and unmanned aerial vehicle platforms. It has equipped the Su-30 with anti-radiation missiles that work on the same principle of U.S. weapons that were so crucial to our own victories. China's anti-radiation missile, the FT- 2000, is described in their sales brochures as an ``AWACS killer.'' The PLA is also producing state-of-the-art technology to improve intercept, direction finding and jamming. It may also be producing jammers for use against America's most successful weapon, the satellite-guided JDAM munition that so accurately uses the U.S. Global Positioning System. Their efforts also include producing laser weapons, such as the man- portable ZM-87, advertised for blinding human vision and electro- optical sensors, radio-frequency weapons and possibly a ground-based anti-satellite weapon. They have also invested considerably in developing short- and medium-range unmanned aerial vehicles, including an unmanned combat aerial vehicle. According to the Chinese military publication Junshi Wenzhai, China has already produced an ``Assassin's Mace'' or trump card to counter U.S. superiority in the Western Pacific. One article identifies five major, quote, Assassin's Maces, unquote, including fighter bombers, submarines, anti-ship missiles, torpedoes and mines designed to destroy foreign aircraft carriers. These systems would be backed by new research by China on other technologies, including kinetic energy and low-observable platforms. This research can be accelerated by acquiring foreign technologies such as the recent activities of two Chinese students at universities collecting information on Terfenol-D, an invention of the U.S. Department of Energy's Ames laboratory. These developments show that China's growing economic power may already be translating into military power. It is clear that most large American companies already perceive the size and importance of China. What is not clear is if the U.S. Government has made a similar intellectual leap to understand the new geography of the 21st century. In 2002, the U.S. State Department conducted a major study of the needs of the U.S. Government in China. The Beyond China 2000 Action Plan cut 55 people from permanent U.S. Government desks in China. The State Department's Bureau of East Asian and Pacific Affairs noted the decision reflected, quote, hard-nosed decisions, unquote. Congress recently ordered the State Department to review the future needs of the U.S. Government in China by 2010. In its February report, it is difficult to see what measures the State Department used to justify reducing the size of the U.S. Government in China. In 1975, the new U.S. liaison officer in Beijing under Ambassador George Herbert Walker Bush, who later became president, processed 651 non-immigrant visas to the United States. In 2003, U.S. consular officers handled 320,000 such applications. From a handful, the number of Chinese students rose to over 60,000 in the U.S. last year. Only 38 Americans registered with the Beijing liaison office in 1975. Today, over 3,600 Americans are registered in addition to over 1 million American tourists visiting China each year. The State Department admitted to Congress noting that staffing in the U.S. embassy in Beijing and the Consulates General is currently inadequate to the growing workload. The workload of the U.S. Government in China is growing for other reasons. In 2001 alone, China joined the international coalition against terrorism, the World Trade Organization, hosted the Asian- Pacific Economic Conference, and won the bidding of the 2008 Olympic games. These issues came in addition to key concerns regarding nuclear nonproliferation, human rights, intellectual property, and religious freedom. The State Department projects that the number of U.S. Government agencies wishing to station personnel permanently in China will rise from 12 agencies to over 20 by 2010. Several agencies, including the Bureau of Alcohol, Tobacco and Firearms, developed but then halted plans to deploy in China. The United States broke new ground on a new embassy complex last February. With the new embassy, the State Department plans only a modest increase in official Americans stationed in China from 960 to 1,200. Plans to expand America's eyes and ears in China do not depend only on the size of our embassy in Beijing. They also depend on increasing the number of Americans in the diplomatic service who can master a very difficult language. In 2000, the State Department launched its China 2000 Initiative. The mission of the Initiative was to develop infrastructure to meet the projected physical and human needs, including language. This Initiative is very small, modestly increasing the number of Chinese students in the State Department annually from only five to only 15. The Initiative also includes some advanced training for just five students in Beijing and a mail program for lessons to only 30 other students to maintain Chinese language proficiency. Such efforts appear grossly inadequate compared to China's central role in the 21st century. With the largest trade surplus, the largest economy, the largest military budget outside the United States, China deserves a special relationship with the United States. In November, 2002, a task force under Japan's Prime Minister Koizumi released their report designating China as Japan's top foreign policy priority for the future. The decision makes sense for Japan but, given China's growth, its position on the U.N. Security Council, and the future size of its economy, it may make sense for the United States to do this as well. Our country has been the home of the world's largest economy for 130 years, but that is about to change; and this change will be one of the most profound shifts of the new century. There was a time early in the history of the United States when our national income was not at the top of the international heap. Today, under our Pax Americana, it may be difficult for us to reconnect with our forefathers and mothers who were forced to depend only on diplomacy in the face of very long odds. Avidly, we retell parts of U.S. history, the Revolution, the Civil War, and the victories of World War I and II, all to stoke American pride; and these examples are used to confirm the superiority of our own ideals. But American history has less-well-known examples of when we struggled without our traditional advantage in material and money. I put this question to the House, when was the last time that U.S. Armed Forces faced a military from a country whose economy was larger than our own? One summer day in August, 1814, comes to mind. British soldiers and marines marched on in Washington in one of the last acts of the War of 1812. U.S. forces met them in what we now call the Battle of Bladensburg. The battle went so badly for the Americans that British called it the ``Bladensburg races'' because U.S. forces ran away so quickly. Britain's 85th Foot Regiment still displays eagle-flagged standards of two American regiments captured that day. The following day British forces burned the Capitol and Executive Mansion to the ground. History reminds us that the United States has not and will not always be the Nation on Earth with the largest economy. With an America of unquestioned commercial dominance, we can afford to make diplomatic mistakes. In a world where America holds fewer cards, we cannot afford miscalculation. We are quickly nearing a world in which China will play a central role in the diplomatic life of the United States. British diplomats before the world wars would have scoffed at the notion of their American cousins playing a central role in world politics. Let us hope that the new American diplomats of the 21st century understand how quickly the post Cold War world has changed. Our President Truman set the record of his time for being an unpopular president. In 1946, he stood at just 32 percent in the polls. Thankfully, he steeled his heart and made the tough decisions needed to design a successful campaign through the Cold War against the Soviet Union. America and freedom won the Cold War without fighting World War III. When we look towards the 21st century and China's coming role in its history, will our leaders lay the foundation for America's diplomatic success? I ask that question to the House tonight. And I thank Reed Bundy of my staff for helping me prepare these remarks.