Donald Manzullo

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I thank the gentleman for yielding. Our 1 hour tonight is on Bosnia, but I just cannot stand to sit here and listen to some of the rhetoric that has come from the other side of the aisle without responding to it. No. 1, if anybody read this morning's Washington Times, they would have seen an incredible quote by the Secretary of the Veterans' Administration, Mr. Brown, who admitted that under the Clinton budget plan, veterans would have suffered greater cuts than under the Republican plan that we have imposed. The Republican plan is more generous toward the veterans than the Democrats, and yet to listen to tonight's rhetoric, the Republicans are gutting and hurting and injuring the veterans that have fought so valiantly and have served so valiantly in the armed services. It is simply not true. The Democrat budget that was set forth by the President has deeper cuts than those set forth by the Republican budget, and that is stated officially by the Secretary of Veterans Affairs, Mr. Brown. No. 2, we have heard the rhetoric about the Republicans talking about taking over, taking the hands off the pension plan. I serve on the Joint Economic Committee, and we had a vote in this House about a month ago that said, we are on record as opposed to something called the economically targeted investments, the ETI, where the Clinton administration wanted to raid $4 billion from the pension plan in order to put it in the pork projects, in public housing projects, and very questionable projects all over the place.

Mr. MANZULLO. Mr. Speaker, I sit on the Committee on International Relations, and we have had a couple of very disturbing committee hearings in the past several weeks concerning certain administration officials who are attempting, in all earnestness and desire and sincerity and honesty on their part, to explain to the United States [[Page H 11927]] Congress exactly what the policy, if any, of the President is with regard to Bosnia. Let me take you back to a hearing that we had involving Secretary of Defense Perry, Secretary of State Christopher, and General Shalikashvili, the Chairman of the Joint Chiefs of Staff, and I asked this question. I said, ``Is there a plan to arm Bosnia?'' And I said I would like a simple yes-or-no on it. And the answers that came from all three were very cautious, very guarded, really, because they really did not know the answer to it. The reason I asked that question is as follows: If there is a plan to arm the Bosnians, then the presence of American troops in Bosnia- Herzegovina would be for the purpose of holding at bay the Serbs until military parity were reached. And none of the three really wanted to tackle that question, because they knew that it was a trap and it was a loaded question. I loaded it on purpose, because if there was a plan to arm the Serbians--and I doubt if our colleagues in England and France would agree to it, because both Mr. Major and Mr. Chirac have been opposed to it, and they are a vital part of NATO--then it was obvious that American troops would be in harm's way. They would be in the role of a referee, and can you imagine that type of a policy, as we sent peacemakers there for the purpose of holding one side at bay while the other side has the opportunity to arm itself. So none of the three could really come up with a reasoned answer. The problem is that the Clinton administration is seemingly trying to make American troops fight the war that we are not allowing the Bosnians to fight for themselves. The problem is there has been a consistent policy by the United Nations, the dual key policy of the U.N. having to go back, NATO having to go back to the U.N., et cetera, that says there is something wrong with allowing the Bosnians to arm themselves, and when the United States insisted on going along with this multilateral embargo, this means that it has placed itself on the side of the Serbs in this war. So why not allow the Bosnians to arm themselves and let them fight their own war? The second problem is we had another hearing involving Richard Holbrook, Assistant Secretary of State for European Affairs, and he said it would take up to 100,000 troops in order to extricate the present U.N. troops. I said I do not understand that. I said if we simply served notice that the U.N. peacemakers are going to be withdrawn, I said, who is going to shoot at people who are withdrawing? And he could not answer that question. I think the third thing that comes to my mind on this, Mr. Speaker, is the book that was written by former Secretary of Defense McNamara, who said it was a mistake and knew we could not win the war, and yet stood by to see thousands and thousands, hundreds of thousands of American troops sent to Vietnam. Now, can you imagine that, a high administration official, the Secretary of Defense, writing his memoirs in a book, making money on it 20 years after 50,000 young Americans have given their lives, saying that at the time he knew the troops were going there that he knew we could not win the war? I do not want to see that happen again, and 20 years from now have the Secretary of State or the Secretary of Defense write a book and say: Well, the President ordered those troops there; we knew we could not win the war, and yet we stood by because these are the directives of the President of the United States. Mr. Speaker, I tell you, we have no business fighting a war in Bosnia, and as former Ambassador and now Congressman Funderburk so eloquently stated, it is centuries of conflict, going all the way back to the Bosnian tribes and the Croats and the different parties involved in that very precious area around there. We have no business being involved in a war over there. We have a business to try to bring about the peace, but not at the price of American blood.

Mr. MANZULLO. So the Republicans had to fight back this incredible program, this incredible raid on the pension plans in this country called the economically targeted investments. What were some of these investments? Well, we had teachers; pension plans in the eastern States losing millions of dollars on housing projects, and all over this country, one failure after the other, because there are $4 billion of private pension plans that Democrats could not wait to get their hands on. The third thing that I would like to address is the rhetoric over the so-called tax break. Mr. Speaker, the tax break is not for the rich in this country, but the CBO shows, and several organizations show, that when the tax, so-called tax break goes into effect, those taxpayers in the highest quintile, in other words, those earning in the upper 20 percent, will end up paying more taxes, and in addition, 75 percent of the capital gains taxes in this country are paid by those earning under $75,000 a year. That is not high income, and 87 percent of those who will gain from the tax cut for children earn under $75,000 a year. I mean clearly, this is not high income, this is common sense, because we believe that the American people who have worked very hard for their dollars know much better how to spend their money than the U.S. Congress, and I just had to clear that up.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, this is a very difficult situation where we are posited between two committee chairmen, the gentleman from Pennsylvania [Mr. Clinger]; the chairman of the Committee on Government Reform and Oversight, and the gentlewoman from Kansas [Mrs. Meyers] the chairwoman of the Committee on Small Business. Both of these chairmen have as their goal the streamlining of the acquisition process because it is good for the Government and it is good for businesses of all types. I think, however, we have to take a closer look at the reason for the Collins-Meyers amendment, and that is to ensure that small businesses have a stake in the procurement process. Mr. Chairman, we can go through the different organizations that are for and against this bill, but I think probably the most compelling reason for the Collins-Meyers amendment is by the inspector general of the Department of Defense, a person who is in a civil service position. This is a nonpolitical position. I would quote briefly from the remarks from the letter that is opposed to the underlying bill and it states as follows: It says, under the definition section, the word competitive procedures would have an added definition of ``open access.'' We disagree with the changes. The revised definition of competitive procedures would allow the contracting officer to limit competition on the basis of efficiency. From our point of view, a definition for open access is not needed because under the current statutes all responsible sources are permitted to submit bids or proposals. He also goes on and he says, Subsections (b)(1), et cetera, conforming amendments to provide for full and open competition, that provides open access and is consistent with the need to efficiently fulfill the Government's requirements. The inspector general says we disagree with the changes because we believe this is a further attempt to limit the use of full and open competitive procedures. Mr. Chairman, back in 1984, this body looked at the situation and it passed the Competition in Contracting Act in 1984, which established the current standard of full and open competition, the standard to which the gentlewoman from Illinois [Mrs. Collins] attempts to restore under her amendment. Mr. Chairman, we are dealing with the public trust. In one sense the Government cannot be as selective as the private sector with whom it does business. Everybody deserves an opportunity to compete for a Government contract. The examples are there. Prior to the act, there was a bid for a flame holder for the F-100 engine for the Air Force. The bid came in at $5,000, depending upon the size of the buy. When the Air Force restricted the purchase of the prime contractor, the cost jumped to $16,000 per flame holder. And, again, a divergent nozzle segment for the F-100. The bid went from $2,400, when there was essentially sole sourcing, down to $1,000 per unit from the same contractor when this type of competition was allowed. Mr. Chairman, the small business people of this country are very much concerned that they have a stake, that they have the ability to compete in the procurement process. In the area which I represent, in the northern part of Illinois, over 6,000 different contracts have been signed by businesses with the Federal Government over the past 10 years. We are not talking about an inside-the-beltway type of thing. We are dealing literally with tens of thousands of small businesses that want to get involved in selling to the Federal Government. The Collins-Meyers amendment strengthens a good bill. It strengthens the bill of the gentleman from Pennsylvania [Mr. Clinger]. It is not a weakening amendment. Members of this body voted overwhelmingly a few months ago to adopt the Collins amendment to the DOD authorization bill. Members of this body are already on record in being in favor of advocating small businesses becoming involved with the procurement process. Therefore, Mr. Chairman, I would urge the Members of this body to back the Collins amendment. It is good for the United States of America, and it is good for small business.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, the Clinton administration is trying to allow $3.7 trillion in pension money to be used for risky investments as opposed to sound investments. This means the hard-earned pension money deposited by present and future pensioners is going to be used by politicians to fund pet projects that are very risky. The Clinton administration wants American workers to bankroll its liberal social agenda. It is risky social investing by any other name, and whenever it has been tried before, it has delivered consistently substandard returns. The American workers are being asked to exchange investments in blue chips for poker chips and thus jeopardize their entire retirement. Just take a look at the ETI track record in the public pension system. In 1993 the State of Connecticut lost $25 million from pension funds in risky investments. The Kansas public employees retirement system tried to use its funds for ETI's. It lost hundreds of millions of dollars so far. In Pennsylvania $70 million in public school employees' and State employees' retirement funds were sunk into an instate Volkswagen plant which lost 57 percent of its value in 14 years. In Missouri an ETI adventure, and it is an adventure, lost $5 million in retirement savings, and in the State of Arkansas, where President Clinton in 1985 signed a bill with a quota that between 5 and 10 percent of all pension funds must go on to ETI's, the Arkansas State auditor, Julia Hughes Jones, openly defied the Governor and said these are risky ventures, risky ventures indeed, building a sorority house on a campus with money that belongs to the teachers and the public workers of the State of Arkansas. Mr. Chairman, the investment opportunities in this country are guided by something called sound and prudent investment, not a Federal crap game, and that is exactly what the President is trying to do. He is trying to find all kinds of moneys, wherever they are, and put our American workers' pensions, our future pensions, at risk. Now, if we are not trying to change the standard by our bill, if we are simply saying, ``Use the prudent-man rule,'' then the Democrats, our colleagues, should agree with this bill, they should vote yes for it, because this bill simply says under all circumstances whatsoever the prudent-man rule of investing will be done, and, therefore, we need a clear and definitive statement, we need legislation that protects the American workers in this country, that says once and for all our dollars will be invested only in sound, prudent investments and not in gambling investments.

Mr. MANZULLO. I yield to the gentleman from New Jersey.

Mr. MANZULLO. Mr. Chairman, I thank my good friend, and he is my good friend, the vice chairman of the Joint Economic Committee, the gentleman from New Jersey [Mr. Saxton], for his tremendous work on this timely and important legislation.

Mr. MANZULLO

Mr. MANZULLO. The point I was trying to make is the fact that we look to government to create our community now and that is the real danger. We all do it. Good, solid, bedrock conservatives like ourselves, we think, well, why can the government not do something about it? Well, the government should be the place of last resort. Not the first place we go. It is the mentality with which we have grown up. We have to turn inwardly and try to resolve our problems.

Mr. MANZULLO. If the gentleman will yield, I got into a very interesting controversy. I tend to get into those once in a while. Whenever you take an oath that you are trying to cut spending, that happens. I sit on the Committee on International Relations. We had an opportunity to take a look at all these incredible student exchange programs. USIA carries them, about 42 different agencies carry them, over $2.5 billion a year. In fact, I just got a request to meet with a member of the Italian Communist Party, brought over to this country, paid for by the USIA, so he can talk to American legislators about elections and democracy and things of that nature. There has to be some good in every program, and I am itching my head, or scratching my head trying to find that one. So I had moved to the Committee on International Relations to cut out $40 million worth of these programs. I did not get too far there. So I filed an amendment on the floor for regular debate. And goodness gracious, USIA called people back in the district. I got a fax, one of the nastiest faxes, from a State university not located in my district, written by the woman in charge of these exchange programs, three-page fax on letterhead, ``How dare you be so unkind and cruel in cutting these programs.'' And she went on for about two pages, and then at the end, ``I am going to organize my friends and vote against you.'' That did not bother me. She did not live in the district anyway. So I called the president of the university. He was not in. I talked to the assistant and got back a three-page fax from the attorney for the school. He said, ``I don't see anything improper in people on our staff lobbying Members of Congress.'' Mind you, they are using Federal dollars if you stop to think about it, especially in her program, `` * * * lobbying Members of Congress. Perhaps her letter was too strong.'' Then he went on for two pages of his own to extol the virtues of these programs. There is this mentality. You have heard NIMBY, not in my backyard. One is cut everybody's program except mine. I got editorialized because the newspaper back home said Mr. Manzullo did not want to cut the Fulbright scholarships because those are popular with politicians and their kids. I moved to cut everything. So in the end we compromised and cut out $20 million in those programs. I got a call from the staff of International Relations, and we worked out a compromise. We saved $20 million just like that. And yet you have to look people in the eye and say if you want to do something about this $5 trillion national debt, which according to a chapter called Generational Forecasts that appears in the budget that says by the time every child born after 1992 enters the work force he or she will have an effective tax rate of between 84 and 94 percent, that is guaranteed socialism. It is a guaranteed collapse of our republic as we know it. We have to be stern and say this country is going to collapse unless we stop that kind of spending. What I found is that if you tell people that, they say, ``Well, but let me tell [[Page H 8679]] you about this program of mine because it is an investment.'' You know, you can take a look at any 1 of the 10,000 programs we have in the Government, and most of them will have some good that comes out of them. I had a young man in my office who came from Russia, an 18-year-old kid. You can tell that some day he is going to be a leader in that country. We talked for a half an hour. He had come over to this country, 1 of 6,000 students who came from the old Soviet Union, at a cost of $30 million a year, paid by the American taxpayer. Does the program have worth? You bet it does. But we have got to draw the line and say where does Congress have the authority to spend money we do not have?

Mr. MANZULLO. Well, everything is alive and well in Illinois. It is a magnificent district that I represent, and I think one of the most interesting things that occurred, we had a series of three town meetings. It is the district that is well served by media, and some of the Members had as many as 30 town meetings in order to get across the stretches of their congressional district, and fortunately we have an area that can be served by the media so that we can have fewer town meetings, spend more time in preparation, more time at the meetings, et cetera, and we decided to have a town meeting at one of the senior citizens high rises, retirement homes, and put on this demonstration with overheads showing, as Walter did, that, regardless of how you look at it, there will be no money for Medicare by the year 2002. I mean you can talk about people having to receive less, if that is the case, and people said, ``Well, gee, that is going to hurt here and everything,'' and I said, ``Well, remember this thing will be broke by the year 2002 unless we do something to really radically transform the system of Medicare,'' and I said, you know, as you mentioned, that in this meeting that there are somewhere between 1 and 3 million people. I am not sure of the number of former Federal employees who are still on the big FEHBP health insurance plan that most of us still have, whether you work for the Department of Agriculture or you are a Member of Congress. You can opt 1 of 30 different plans. Mr. Speaker, I said, ``Do you realize that there are seniors in this country that have health insurance in lieu of Medicare where they have prescriptive, dental, and optical coverage,'' and they, sort of stunned, looked at me, and they said, ``Well, how is that done?'' I said, ``Well, essentially what the Federal Government really does is it is a voucher, it is interjected, the private, private enterprise, into a stagnated governmental system and offering seniors more. Can you imagine that; more coverage because of the private sector?'' And I said what the Republicans are trying to do is, if you want Medicare the way it is, you do not have to do anything. You automatically are enrolled. You want to try a new plan? Come the anniversary date or the opting-in period, you get into that, and I said, you know, we are trying to experiment with ways to bring down the cost of Medicare and possibly even increase the coverage. And so we talked about 20 minutes, and this was all seniors, and there were only about two questions on Medicare because they registered completely, understood, what was going on and then went on to questions about our legal immigration laws. There had been a 30-minute documentary about our illegal immigration, and I left there a little bit perplexed because the people of this country underestimate the intelligence and the willingness to be part of the solution of the seniors and the seniors will not become political pawns in the hands of either party. What they really appreciate is the fact that the Republicans have taken the initiative to really delve into a highly controversial area, an area where people said what you mentioned, Medicare as the third rail of political death. That is not the case because the Republicans under the leadership of Mr. Gingrich, who came right out and said we have got a problem, let us meet the problem head-on with the seniors of this country, let us be honest with them, let us tell them what the trustees' report is showing, that the system is going bankrupt, and let us rely upon the integrity of the seniors of this country to understand the true message, and that is what I found having crossed the district. I tell you I am so proud of the seniors that I represent, and they are indicative of seniors across this country. I think it is absolutely remarkable how fully they comprehend the problem.

Mr. MANZULLO. Mr. Speaker, one of the really disturbing things that is happening in this country, and I believe it is due to the fact that we now have had three, indeed as many as four generations on welfare, is the destruction it does literally to the souls of those children who all they know is the welfare check. Our colleague from Florida, Congressman Dave Weldon, during his campaign for Congress, talked to a friend of his who was interviewing three children. And he asked, what do you want to do for a living? One said, I want to be a policeman, and the other one said, I want to be a fireman. And the third child said, I want to collect checks. I mean, I do not believe the people in this country are willing to cede personal liberty to the Federal Government in exchange for a promise of Government security. I really do not believe that they are willing to do that. And yet what is happening is the more people get used to the fact of saying, well, let the Government do it, you know, my colleagues, let me just share with you a burden that is on my heart. I do not want to offend anybody when I do this. When we were kids, the activities that were planned for us were done by our parents. I was raised before television. I remember the area in which we grew up in Kenrock in Rockford. It was a pretty tough area of town. On Saturday nights, my dad and some of the local merchants--dad ran a small grocery store--would take the 16 millimeter projector from the school, because the school was the community, and show movies on painters tarpaulins that were tacked to the back of billboards on the corner there. And hundreds of people, literally hundreds would show up, and we would have peanuts and popcorn. And there was a whole community together. And my dad, who passed away about 6 years ago, said, when Americans tore the front porches off their houses, when they turned those front porches into TV rooms, the people of this country stopped talking to one another. And before we would look internally. We would look to the schools, to the churches, to each other. And when people stopped talking, they started looking to the Government for an answer. What an incredible observation by a man who had been raised through the depression and talked about the great days, when everybody would sit on their front porches in the summertime and just throngs of people would walk down the streets, saying hello to each other, checking up on one another, being concerned about one another's children. He said, ``my dad passed away 6 years ago,'' he said, ``America has changed and not for the better.'' What a sad commentary.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, the gentleman from New York [Mr. Schumer] has just called every sheriff, every police official, every mayor in this country, a little local politician, when he said that the Members of this body, that the Members of the U.S. Congress, know more about fighting crime than local sheriffs, and that is a lie. Mr. Chairman, I have before me a letter from Donny Gasparini, a Democrat, who is the sheriff of Winnebago County, one of only 32 counties in the entire United States to be accredited by the Commission of Accreditation for Law Enforcement Agencies. He is saying this: We need flexibility in this program. Sure it is good to have money for cops on the beat, but each new officer accounts for an average of 15 arrests per month. He sent a letter to President Clinton saying, Give the sheriffs of this country flexibility. Do not box us in, because we need money not only to hire cops if we need them, but for drug courts, day reporting centers, community-based drug rehab programs, work release options. Mr. Chairman, this is a professional law enforcement officer. He is the head of the Illinois Sheriffs Association. He knows more than the U.S. Congress. He is the one saying give the local police enforcement agencies the flexibility to spend the money to develop the tools that they know best in order to fight crime. Take power away from Congress and give it back to the local communities. That is why the block grants is the best program. Mr. Chairman, I submit the following letter: Office of the Sheriff, Winnebago County, Rockford, IL, June 15, 1995. Hon. Donald Manzullo, U.S. Representative, Washington, DC. Dear Don: Enclosed is a copy of a letter I am sending to President Clinton regarding the difficulties with appropriations for the Crime Bill. Can you suggest any additional steps we in corrections should be taking to assist with the decision-making process? This matter is of grave concern to our community. We have invested much time and money in trying to jump through the federal hoops for funding assistance, only to have the rules change in mid-jump. Can you help? Sincerely, Donald J. Gasparini, Sheriff.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I would also like to add to the Record an article from Business Week magazine that highlights how increased economic activity and Western contacts have improved overall human rights, especially in the southeastern provinces in China. Change sometimes comes too slowly for Americans but I am confident that the inevitable triumph of democracy and respect for human rights will happen one day soon in China just as it has in other parts of the world. [From Business Week, June 6, 1994] China--Is Prosperity Creating a Freer Society? The contrast is stark. Chinese authorities continue their crackdown on dissenting voices and put security forces on alert in Tiananmen Square. At the same time, in the grimy central city of Wuhan, a professor is bringing a new concept to China's heartland: the rule of law. Armed with a Yale Law School degree and a team of young associates, Wan Exiang runs China's first public-interest legal center. From his bustling offices, Wan takes on government officials--including members of the much-feared national police, the Public Security Bureau (PSB)--who have long ridden roughshod over individual rights. Increasingly, Wan is winning. In one recent case, his Center for the Protection of the Rights of Disadvantaged Citizens came to the defense of an entrepreneur from Hangzhou who left his job as a technician at a state-backed company to start his own business. Accusing the man of taking company patents, police put him in detention, ransacked his home, and confiscated all his belongings. After a plea from the man's wife, Wan dispatched two lawyers to represent him. They won-- and got the PSB to pay damages of 500 yuan--the equivalent of six weeks' salary. Altogether, the center, which is funded in part by the Ford Foundation, has received 1,600 requests for help. As the June 4 anniversary of the 1989 Tiananmen massacre approaches, President Clinton is poised to make the politically costly decision to renew China's most-favored- nation trading status (page 102). He is doing so even though China has been cracking down hard on its most vocal dissidents. It has re-arrested Wei Jingsheng, a leader of the ``Democracy Wall'' movement of the late 1970s. Beijing has imprisoned many other political activists and has rounded up religious and labor leaders. But no matter what an increasingly jittery leadership does to repress and control, a quiet revolution is taking place. Across the Middle Kingdom, the glimmerings of a freer society can be seen in the actions of Chinese such as Professor Wan. China's contact with the U.S. and the rest of the world is helping make that happen. Although Clinton's decision was in part based on pure commercial reasons, it does reflect a growing view among experts that the annual debate about human rights in China has been overtaken by deeper, grassroots change in the world's most populous nation. An explosion of information technology, for example, has allowed the Chinese to link up to the world with fax machines, telephone lines, satellite dishes, and personal computers. Thanks to market-oriented reforms, millions of Chinese can now decide where to work and live instead of being told. A growing local media, aligning with regional power brokers, is spotlighting tension between provincial authorities and Beijing. And workers and peasants are becoming more vocal about protesting corruption, layoffs, and taxes. Two or three years ago, signs of people circumventing or undermining totalitarian rule could be dismissed as anomalies. But no longer. Just as China's economic boom has brought increased prosperity to millions, so too is life for ordinary Chinese becoming easier and freer. ``There has been a substantial evolution--economic, social, and political-- that makes the state less intrusive in people's lives,'' says Kenneth G. Lieberthal, a China expert at the University of Michigan. Indeed, the central judgment that Deng Xiaoping made 15 years ago now appears to be proving faulty. Deng reckoned that by opening the door to the outside world, China could absorb foreign investment, trade, and technology while spurning the cultural and political influences, or ``bourgeois liberalization,'' that would challenge Communist Party rule. But years of double-digit economic growth are transforming Chinese society itself, loosening Beijing's control over 1.2 billion people. In Guangdong, workers angered by dangerous factory conditions have formed more than 800 illegal trade unions. In Beijing, live talk shows allow radio listeners to discuss once-taboo subjects, from urban pollution to extramarital affairs. In a Shanghai factory, the subject at mandatory Communist Party meetings is bonuses, not politics. And in coastal cities and interior villages, attendance at underground churches is soaring. Virtually no one accepts the ideology called communism anymore. Shifting sands Many of these grassroots changes have frightened the Communist Party leadership, which is already rattled by Deng's deteriorating health and an inevitable power struggle. Yet the earth continues to shift under the leadership's feet. Beijing must encourage growth to stay in power, but that only increase the potential for greater individual freedom. Only a few years ago, the government could dictate where citizens lived and worked, when they married, and when they could have a child. But today, a rising middle class is quietly challenging centralized control. ``Change is happening from the bottom up, regardless of what happens with the Communist Party,'' says David S. Goodman, a fellow at Murdoch University's Asia Research Center in Perth, Australia. That doesn't mean China's transition to the post-Deng era will be smooth. The party still maintains its monopoly on power. Moreover, the state controls the media and arrests whomever it wants. In Tibet and Xinjiang, ethnic minorities face severe repression. Meanwhile, the tumultuous move to a market economy has created a political and social powder keg. The economy grew 12.7% in the first quarter, barely cooling off from its 13% pace in each of the past two years. Inflation is 24.6% in the big cities, and corruption among officials is widespread. In 1989, that combination led to large antigovernment demonstrations. If similar unrest breaks out after the death of 89-year-old Deng, the leadership may once again call in the troops. As the years after Tiananmen have shown, however, the People's Liberation Army isn't interested in turning back the clock. It's making too much money in its lucrative businesses, ranging from toys to tourism. Likewise, the party can be counted on to beat back outright challenges to its rule, but its members are also making money in China's rush to get rich. new suits Where once the party and central government could dictate just about anything, now they must compete for power with provinces, cities, giant quasipublic corporations, and even workers and peasants. As a result, China continues to evolve away from the totalitarian model of the Maoist era and the authoritarian regime of the Deng era. ``The system is losing its central control,'' says M. Scot Tanner, an expert on Chinese politics at Western Michigan University. He argues that China is gradually becoming a ``soft authoritarian'' regime like Taiwan or South Korea in the early 1980s. An unlikely arena for this clash of interests is the nation's rudimentary legal system. As in Wuhan, a new set of laws and property rights is evolving throughout China. In a country where the rule of law has long been subordinate to guanxi, or personal connections, the Chinese have started to turn to the judicial system to resolve business and personal disputes. Chinese citizens are suing almost everyone--from local enterprises to the police. For instance, Zheng Chengsi, a slender, bespectacled professor in Beijing, brought suit against two of his former students last year after discovering they had plagiarized more than 60,000 words from his work on--of all things--intellectual-property rights. Zheng's lawyers filed the case in Beijing's East District court last year. The defendants tried, in vain, to persuade Zheng to settle. But he insisted he didn't want damages. ``My rights were violated,'' he says. ``I wanted these things to be published.'' In August, Zheng got his wish: The judge ordered the defendants to publish details of the case in nationally circulated newspapers. Like Zheng, most Chinese plaintiffs are involved in disputes with other civilians. But some citizens are challenging government officials in court. In 1992, Liu Benyuan, an entrepreneur in Sichuan province, sued local cadres who tried to take away his mineral-water bottling plant. They were upset because Liu refused to pay them off. Besides his bottling plant, they also closed his chemical and printing factories. Liu fought back. Last February, a court ruled in his favor, giving him back his businesses. China's legal system is ill prepared to handle the growing clamor for justice. As claims multiply, the number of lawyers is expected to quadruple, to about 200,000, by the year 2000. Many citizens continue to distrust the system's impartiality, since local officials often treat courts as arms of their governments. And when the courts do act independently, they often have great difficulty enforcing their judgments. That led editors of the official Legal Daily newspaper on May 23 to issue a daring call for an independent judiciary. ``The idea of economic rights is spilling over into other areas such as individual rights,'' says Helena Kolenda, a Beijing- based lawyer with the New York law firm Paul, Weiss, Rifkind, Wharton & Garrison. ``It has sparked a consciousness.'' The demand for more rights is moving beyond individual lawsuits and sparking organized, large-scale protests. Two groups recently staged sit-down strikes in front of the Shanghai municipal building, protesting government secrecy and consumer ripoffs. The unrest has also spread to the countryside, where 75% of China's population lives. Last year, about 4,000 Guangdong villagers conducted a demonstration on a main thoroughfare. They were upset that local cadres had sold off prime farmland to Hong Kong real estate developers. More worrisome to Beijing, unrest is spreading in factories, where workers increasingly are organizing. That has spooked the government, adding to worries that dissidents and intellectuals are reaching out to disgruntled workers. But as state-owned enterprises lay off employees, workers throughout China are going on strike. In March, there were 270 strikes in Liaoning, Shaanxi, and Sichuan provinces, several lasting as long as 40 days and involving 10,000 workers. In Tianjin last fall, laid-off workers marched on a state-run factory, carrying signs asking: ``How can we feed our children?'' Says Trini Leung, Chinese labor expert at the University of Hong Kong: ``Labor unrest is bubbling very hot, and the authorities are worried.'' Like peasants in the countryside, urban Chinese workers are furious about the rampant corruption and lawlessness among some well placed officials. One day last fall, a Shanghai bus driver found his way blocked by parked limousines in front of a karaoke bar frequented by government and Communist Party officials. When the bus driver told the chauffeurs to move, a group of men fatally beat him. Shanghai's bus drivers responded with a wildcat strike, refusing for several days to drive on the busy route. The state hopes to prevent an explosion of labor unrest by encouraging laid-off workers to find jobs in the growing private and quasipublic sectors. But the unrest is not limited to the public sector. Workers at foreign joint ventures run by Taiwanese, Hong Kong, and other foreign investors have struck to protest abysmal working conditions. In Fujian province, where Taiwanese companies employ more than 400,000 people, workers often spend 16 hours a day on the job without overtime pay. Migrant workers in Guangdong joint ventures typically make $35 a month, less than half of what local residents make for the same work. Last fall, 49 workers died in fires at two factories run by investors from Hong Kong and Taiwan. Even with its many problems, the private sector's growth has made it much harder for Big Brother to keep tabs on each citizen. Economic reform has vastly increased mobility for ordinary Chinese. That has undercut the dang an, or personal dossier, system. The dang an, which includes an employee's family background, political leanings, and class status, once was used by officials to retain workers, limit promotions, and even ruin careers. But now, Chinese are going into business for themselves, while foreign corporations don't care about such dossiers. With the declining importance of the dossier, the party's stifling presence in the workplace has been drastically reduced. Party bosses are no longer the decision-makers. And the political meetings that were once mandatory are no longer held at wholly owned foreign ventures or at many joint ventures. Even at state enterprises, less time is spent mouthing Marxist mantras. At China Textile Machine Co. in Shanghai, political meetings have been pared from an hour a week to 20 minutes. ``The empty talk is gone,'' says Zheng Bohua, the company's deputy general manager. ``Now we discuss production.'' U.S. companies, although anxious to defend their commercial interests in China, argue that they, too, are changing the thought processes of Chinese workers. Learning how to make individual decisions does leave a deep imprint. And working for a Western company almost automatically means a higher standard of living, with better pay and benefits. ``If I were asked to go back to a state enterprise, that would be hard to deal with,'' says Ren Shouqin, 54, vice-president at China Hewlett-Packard Co. in Beijing. hp sent him to the Monterey Institute of International Studies for an mba. soaps and cnn At HP's headquarters in Beijing, well-heeled young women and men work at computer terminals, watch educational videos, send electronic mail, and read foreign magazines. In the Beijing area, 100,000 to 200,000 Chinese citizens work for foreign companies in offices that increasingly resemble the home office. Cai Ping, a 23-year-old manager in HP's personnel department, regularly communicates with hp staffers in Hong Kong and Palo Alto, Calif. ``It's as if we're in the same building,'' she says. ``Right now, I'm in touch with the trends of the world.'' It's not just elite workers at foreign multinational corporations who are in touch with the rest of the world. In Guangdong, millions of people get their news from two Hong Kong television stations. With a satellite dish, moreover, they can get up to 18 other stations. Despite a ban on such dishes, they are common fixtures in the Guangdong urban landscape. Millions of Chinese who understand English will soon be able to watch Cable News Network. Of course, the state-controlled media remain on a tight leash, and authorities still strike out at individual journalists who hit too-sensitive nerves. In April, Xi Yang, a reporter for a Hong Kong newspaper who had written about plans for an interest-rate increase, was sentenced to 12 years in prison for allegedly ``stealing state financial secrets.'' But commercial imperatives are creating the potential for more reliable news. tv stations in wealthy coastal cities have stepped up coverage of social and economic news. A recent protest in Shanghai was covered by one government station, despite efforts by city officials to black it out. Most of the time, stations stick to more popular fare to lure a broader audience--and advertisers. Taiwanese soap operas are now common, as are news stories about prostitution and corruption. talk radio At the same time that local governments are opening commercial tv stations and newspapers, party organs are on the decline. The circulation of People's Daily dropped from 2.3 million in 1992 to 1.65 million last year. With the government cutting back on press subsidies, the fight is on for advertising dollars and for circulation gains. Some papers have responded by printing fewer political screeds and more alluring tales of sex and violence. Economic change has emboldened the business press. As millions of Chinese have become stockholders for the first time, the business press has become more aggressive in shaking up China's corporations and shining a light on corruption. An increasingly influential business paper is the Shanghai Securities News. The paper warns of stock market shenanigans and covers civil lawsuits involving companies. A few weeks ago, the paper ran the first word of a lawsuit by a widow who sued a securities firm after her husband committed suicide. She claims the firm forced him to engage in illegal insider trading. ``This paper really tells us the truth,'' says one investor. Radio is also slowly moving away from the party line. Talk radio abounds in the large cities, where people's frustrations and desires anonymously spill out over the airwaves. On Guangdong radio, callers regularly criticize the government, sounding off on everything from police brutality to trade policy. On one recent evening, crime is the big concern, as listeners complain about robberies on buses, highways, and city streets. American talk radio it's not. But this profusion of media outlets has created a forum for the country's various power groups to fight their battles. In the past, the powerful Propaganda Ministry could homogenize the country's newspapers. Now, as the decentralized economy has given more power to regional chieftains, various factions are vying for control. With conservatives and reformers wielding control of media outlets, China has not one official press but several. People's Daily, controlled by the conservatives, therefore reports on strikes and rural unrest to demonstrate the dangers of policies advocated by reformers such as Vice- Premier Zhu Rongji, while Shanghai papers report on successful reforms. Even though China's media can hardly be called free, the emergence of divergent voices means the center's ability to control people's minds has vanished. The very values upon which communism was founded are shifting. Since so few Chinese believe in its ideology, the Communist Party's leaders have no option but to press ahead with economic modernization--even as it unleashes social changes. To justify its existence, the party has to deliver prosperity, not class struggle. These pressures can only mount as more Chinese accumulate wealth. the door is open To contain the damage, Beijing's leaders have adopted a strategy of strategic retreats. By pulling back in certain areas, the leaders hope they can limit popular unrest and triumph in the end. But it's unlikely that 1.2 billion Chinese will be content with just the beginnings of a legal system, a freer press, and a trade-union movement. Having won those gains in the past few years, they are pressing for more. Faced with these demands, the Communist Party will be confronted with tough choices. It can lash out, as it did in 1989. Or it can begin to transform itself, as did autocratic parties in Taiwan and South Korea. A violent crackdown would be a huge step backward and would be unlikely to work in the long term. As the years after 1989 have demonstrated, hard- liners cannot repress an entire society and still preserve economic reform. No one is arguing that China is about to blossom into a multiparty democracy. The government's strategy is to co-opt potential pressure groups before they become independent political forces. The technocratic leaders who are gradually taking over the reins of power from the old-time revolutionaries are more willing to allow interest groups to express their viewpoints--but only as long as they remain within the confines of a single party. For now, many Chinese say they are too busy making money to think about politics. Young Chinese, in particular, are learning that wealth means the freedom to travel, to buy foreign newspapers, to win a court case against a corrupt government official. ``If you have money,'' says a taxi driver in Fuzhou, ``then you can buy human rights.'' By this reckoning, the best thing Washington can do to nurture greater rights in China is to make sure its doors remain as open as possible to investment and ideas. ``We have confidence about the future,'' says Aven Yang, senior manager for materials at Northern Telecom Ltd.'s joint venture manager for materials at Northern Telecom Ltd.'s joint venture in Shekou. ``There is bread, and the door is open. We don't want the door to close.'' The rest of the world should make sure it doesn't. By Joyce Barnathan in Shanghai, with Pete Engardio in Guangzhou, Lynne Curry in Beijing, Dave Lindorff in Hong Kong, and Bruce Einhorn in New York.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, the Bereuter resolution moves this country in the direction of putting additional pressure on China in terms of human rights violations. We can do that, and we can also have MFN status with China. This country exports more than $9 billion a year of goods to China. That is close to 200,000 jobs in this country. If we do not have MFN status with China, that will be only one of eight countries with which we have no MFN status with in the entire world. Last year, I spent an entire day with Counsel General Wang Li from China in the 16th district in Illinois, which has 1,500 factories. He told me there are 300 cities in China that have in excess of 1 million people. Seventy-five percent of those cities do not have an airport, and he said that China is in the process of building over 200 airports. This is the time to expand our trade with China. Look what happened this past week. China signed a $1 billion agreement with Mercedes-Benz in a joint partnership to build the minivan in China. That could have been signed with Chrysler, and I hope one day eventually that will happen. What we have to do is to keep open the channels of communication. To deny MFN status would be to close that avenue. President Nixon said in a letter to President Bush in 1989, that ``in the current emotion of the moment our nations seem to be forgetting an important point: A modernized, unified, and effectively governed China that has good relations with us is by far the preferred solution for advancing American security interests in East Asia.'' It was true in 1989; it is true in 1995. Let us move forward and recognize that 60 percent of all world trade is occurring in the Pacific rim.

Mr. MANZULLO

Mr. MANZULLO. Our colleague, Congressman Weldon, is in your freshman class from Florida, was quoted in the Washington Times about a conversation he had with a constituent. This constituent was talking to some young people, and recalled the following story. He asked them, he said, what do you want to do when you grow up? One said a fireman. What do you want to be when you grow up? One said a policeman. What do you want to be when you grow up? He said, I want to collect checks. Isn't that sad?

Mr. MANZULLO. Will the gentleman yield?

Mr. MANZULLO. Will the gentleman yield?

Mr. MANZULLO. That is right.

Mr. MANZULLO. I don't know if the gentleman has read Martin Alaska's book of the Tragedy of American Compassion. It should be a textbook, and in that book he talks about sometimes simply by giving people money, you can really hurt them in the long run. And he talked about early in this country when the role of the churches and the synagogues recognized that it was the primary responsibility of the people, not the government, to take care of those who were involved in poverty. Obviously there are exceptions to everything, people that are disabled or handicapped, obviously our hearts go out to them and it is a matter of priorities to make sure that they are in fact taken care of, and he talked about the wood piles in the bigger cities where men who are unemployed would come to work. They would come to get food, but they were always expected to go out back and chop up wood, which of course was used for heating, and there was nothing demeaning about it because they needed wood to keep the facilities going, and the men willingly would cut the wood because they knew it was short term and there were duties for the women to do that were also on welfare, and the whole purpose of that was that the churches and the synagogues that administered the welfare program wanted to make sure that the people never got used to a life-style where everything was given to them because that robs them of their incentive. And we have a welfare advisory board back home, some of the most fantastic people in the world, a couple of women on welfare themselves. And you know, one of the startling things I found out, completely changed my mind, revolutionized my mind as it was going on, do you know who wants off welfare the most? It is the recipients. They realize they are trapped. They realize they are trapped, and most of them--I mean, these are not the stereotypes of people who are, you know, the stereotype that we see of the welfare recipients. It is not that. Most are single moms who are desperately trying to break that cycle and to get some schooling done and to get off that welfare roll. So they are willing to do it, and they just need the right tools to be able to break that cycle.

Mr. MANZULLO. Will the gentleman yield?

Mr. MANZULLO. I said, now, you tell me to my face that that is going to keep somebody from enrolling at your school. And he couldn't answer that question. And I said, what the Republicans are trying to do is to save that college trust fund so there is more money in it, and the more money that [[Page H 6911]] is in that trust fund, the more money there is to spread around to kids who want to go to school and the more interest that comes in. That spreads the pot out. I said, that is all we are trying to do. We are not trying to destroy it. So we always meet with these incredible arguments that we are trying to destroy, cut out and hurt and be cruel to college students. The farthest thing from the truth.

Mr. MANZULLO. We are talking about what we learned back home over the Fourth of July recess. Just prior to that break, I met with a group of university presidents. One of the Democrats in the group said, ``Oh, the Republicans are destroying student loans. They're ending student loans.'' He went on and on and on and on and on. That is an outright, bald- faced lie. That is the only way I could say it. One of the university presidents said, ``We have got to protect student loans, this isn't right.'' Afterwards, I talked to him. I said, ``Doctor, let me ask you a question. Does your university have a business school?'' He said, ``Yes.'' I said, ``Do you teach in the business school that interest begins to accrue from the time that the person gets the money, not 4 years later,'' as is how the student loan program is presently run. He said, ``That's correct.'' I said, ``Do you realize that a college graduate earns at the minimum $600,000 more in his lifetime than a noncollege graduate? He said, ``I understand that.'' I said, ``And do you also realize that all the Republican plan says is this: That if a college student borrows $30,000, which is the maximum amount of money, and beings to pay it back 4 years after he gets the initial amount, that the additional amount he is going to pay is 55 cents a day in interest until that is paid off''? That is a cup of coffee.

Mr. MANZULLO. That is just the interest on the national debt, not the total amount of the debt.

Mr. MANZULLO. Do you know how many people earn about $100,000 in this country? Two percent. It is 2 percent. That is the national figure that was calculated for the district that I represent. Somehow I hear all this rhetoric, as you say, talking about the wealthy. We are talking about people mainly earning under $75,000 a year. It is a lot more expensive here on the East Coast than it is back where I live in northern Illinois. Out here a house is double the amount, and it presumes that both husband and wife have to work in order to pay the mortgage on a house. When I go to town meetings, we have like open houses. We let the newspaper know that from 7 to 10 on an evening, that Congressman Manzullo is going to have an open house and you can stop by. We will run anywhere from 150 to 200 people who will stop by the office, have cookies and coffee, and sit there and discuss the issues. Those that have particular problems can meet with our legislative aides in private rooms there. One of the things that I like to do whenever I am with these groups, I say, let me ask you a question here: How many of you live in a household where both you and your spouse work? There is about half to 60 percent who raise their hands. I said, do you realize that one of you is working solely to pay taxes? Just one of you. One of you is working just to pay taxes. Every day, every year, the Tax Freedom Day just gets moved back and back and back and back. I just wonder, how long can a nation endure, how long can this republic be free when the tax burden continues to grow and grow and grow and grow? I shudder to think about that. I think what we talked about earlier, about the tax burden, about these babies now that have a guaranteed tax rate of between 84 and 94 percent. We had a vote here on the floor a couple of days ago. I cannot remember exactly what it was but somebody said, well, we owe it to such and such to fund this program. I said, ``We owe it to the children of this country not to fund this program and to cut back on the spending.'' They said, ``Well, we had a contract with such and such a group.'' I said, ``And I have got a covenant with my children and with the people that I represent in the 16th Congressional District of Illinois.'' We represent the babies and those not even born yet. I mean, we have to make decisions that are going to impact the lives of those who have not even been thought of being born yet.

Mr. MANZULLO. One of the things that really amazes me as I hear our colleagues of the liberal persuasion say well, we cannot afford a tax cut. You stop to think about it, to whom does the money belong? The money does not belong to the government, the money belongs to the people. It is the people's money, and the tribute that they pay to support some basic government services should be in the area where they can still have enough to afford to keep their family. Let me give you an example on this capital gains. A good friend of mine several years ago, they bought a house in the suburban Chicago area. The price of houses went up and they made some money on their house. Being wise and frugal, they moved to an other city. Not that it was wise and frugal to move from a Chicago suburb, but they were leaving the area. So being wise and frugal, they invested in a house; they downsized to a house that they could afford. They ended up paying capital gains taxes on that money, even though during the period of time they owned it, inflation crept up, which was not figured into capital gains; there is no indexing going on. It took away more and more of their money, and now they sold their home again because they are having a very difficult time finding work in the Rockford area and are moving elsewhere. Now they have to pay capital gains tax again on this house that they bought just a few years ago. These people have no money. They are living, they are living on borrowed capital. By selling their home, they are trying to get a fresh start, and when people tell me that capital gains tax are for the rich, that is a bunch of nonsense. Because it is hard working people in this country that are the beneficiaries of an appreciation of value in their homes, and they are trying to move somewhere or downsize to another house and they get penalized because of that. This is the only nation in the world that has a confiscatory high capital gains tax. It does not make sense, and it is not the wealthy that are being hit. There is something else, the way the Democrats figure the rich. They are saying well, the rich will gain so many dollars in taxes. Let me give you an example. Let us say a person is of substantial means. That person has a building that he or she wants to sell, but under the present capital gains tax structure, he may have to pay $50,000 in capital gains. I mean it just does not make sense to sell the building. I mean we are talking about a purchase of, maybe the sale of a $200,000 building. So by cutting the capital gains tax in half, he or she might want to sell it. Then the Democrats say well, you just gave a $25,000 break to the rich. That person wasn't going to sell the property in the first place, because the capital gains tax was too high. I would rather have $25,000 now come into the Treasury than money that may come somewhere down the line. What is that person going to do? He turns over that property, gives $25,000 as opposed to $50,000, which he may never give, to the Government for taxes. Whenever a building is sold, generally another one is built, because he or she is going to go out and build another building. The person that comes in and buys that building, do you know what they are going to do? They are going to remodel it. I mean this incredible type of solid growth takes place. If you analyze the capital gains tax structure since the 1950s, there are about five epochs in there where whenever capital gains taxes were reasonable, that the economy grew; I am sorry, that the actual amount of money that came into the Treasury increased each year by between 5 and 7 percent. Since 1986 when capital gains taxes were increased, each year the Federal Treasury sees 2.1 percent less dollars coming in in capital gains taxes. So if you want less money to come in to the Treasury, raise capital gains taxes. If you want more actual dollars coming in, decrease capital gains taxes. It is so simple. It is the biggest boost; I mean this is real growth. This is not make believe government jobs, this is not Americorps, this is not some government give-away, this is actual sales taking place. Do you know what? Just look at it. A building sells, you have a realtor involved, you have a title company involved, you have an attorney involved. Even down to the guy that sells flowers, because a lot of people do not realize that whenever there is a real estate transaction, at least back home, it is customary to send flowers to the new buyer of a building or of a home. It is a mushrooming that takes place in the economy, because the taxes are cut.