Ron Paul

Mr. PAUL

Mr. PAUL. Mr. Chairman, I thank the gentleman for yielding time to me, and I would like to compliment the gentleman for bringing this amendment to the floor. Mr. Chairman, I want to make a couple of points. One, the other side of the aisle has mentioned that this is only a small amount. We are just introducing this idea. We are only giving a couple of dollars now. It reminds me of the arguments in 1913, let us have an income tax, but it is only going to be a fraction of 1 percent. We know what happened. There are plans for what they are doing. This is the time to stop it. I think another point that we ought to make is, how did they get any money already? They got it from the Defense Department. We did not even appropriate the money. They have already started it. They have used American taxpayers' money without a direct appropriation from this Congress, and it is about time we stopped that type of legislation. That is the point. Where did the money come from? The Defense Department. It goes over into the United Nations for meddling, meddling overseas. It is taken away, literally, from defense. We have a problem in this country for national defense. We have Air Force people who do not get flying time. Our men are not trained. We do not have the right equipment. We continuously spend all our money overseas, endlessly getting involved in Bosnia and Somalia, and wherever. I think it is policy that needs to be addressed. It is the policy that allows our administration to do this, because there is too much complicity in allowing the United Nations to assume our sovereignty. That is the point here. The American people deserve better protection. They deserve better protection of their money. They deserve better protection of their youngsters who may get drafted and may get sent overseas. There is a great deal of danger in the Bosnia and Kosovo area, yet here we are talking about starting a new U.N. organization that unfortunately dwells on the term and brags about rapidly deployable. That is the last thing we need from the United Nations. I would like to slow it up, but now they want to take away our sovereignty to go and get involved more easily than ever and more quickly than ever. So this is absolutely the wrong direction that we are going in today. This is a further extension of the notion that our obligation is to police the world. We are supposed to make the world safe for democracy. Just think, since World War II, we have not had one declared war, but we sure have been fighting a lot. We have lost well over 100,000 men killed. We have lost, we have had hundreds of thousands of men injured because we have a policy that carelessly allows us to intervene in the affairs of other nations, and we allow the United Nations to assume too much control over our foreign policy. It is up to the U.S. Congress to do something about that; that is, to take away the funding. This is a great amendment. I cannot conceive of anybody voting against this amendment and pretending that this is only a little bit.

Mr. PAUL

Mr. PAUL. Mr. Speaker, the Soviet system, along with the Berlin Wall, came crashing down in 1989, the same year the new, never-to-end, era came to a screeching halt in Japan. The Japanese economic miracle of the 1970's and the 1980's, with its ``guaranteed'' safeguards, turned out to be a lot more vulnerable than any investor wanted to believe. Today the Nikkei stock average is still down 60% from 1989, and the Japanese banking system remains vulnerable to its debt burden, a weakening domestic economy and a growing Southeast Asian crisis spreading like a wild fire. That which started in 1989 in Japan--and possibly was hinted at even in the 1987 stock market ``crash''--is now sweeping the Asian markets. The possibility of what is happening in Asia spreading next to Europe and then to America should not be summarily dismissed. economic fallacy Belief that an artificial boom, brought about by Central Bank credit creation, can last forever is equivalent to finding the philosopher's stone. Wealth cannot be created out of thin air, and new money and credit, although it can on the short-term give an illusion of wealth creation, is destructive of wealth on the long run. This is what we are witnessing in Indonesia--the long run--and it's a much more destructive scenario than the currently collapsing financial system in Japan. All monetary inflation, something all countries of the world are now participating in, must by their very nature lead to an economic slump. The crisis in Indonesia is the predictable consequence of decades of monetary inflation. Timing, severity, and duration of the correction, is unpredictable. These depend on political perceptions, realities, subsequent economic policies, and the citizen's subjective reaction to the ongoing events. The issue of trust in the future and concerns for personal liberties greatly influences the outcome. Even a false trust, or an ill-founded sense of security from an authoritarian leader, can alter the immediate consequences of the economic corrections, but it cannot prevent the inevitable contraction of wealth as is occurring slowly in the more peaceful Japan and rapidly and violently in Indonesia. The illusion of prosperity created by inflation, and artificially high currency values, encourage over-expansion, excessive borrowing and delusions that prosperity will last forever. This attitude was certainly present in Indonesia prior to the onset of the economic crisis in mid 1997. Even military spending by the Indonesian government was enjoying hefty increases during the 1990's. All that has quickly ended as the country now struggles for survival. But what we cannot lose sight of is that the Indonesia economic bubble was caused by a flawed monetary policy which led to all the other problems. Monetary inflation is the mother of all crony ``capitalism.'' characteristics of the correction One important characteristic of an economic correction, after a period of inflation (credit expansion) is its unpredictable nature because subjective reactions of all individuals concerned influence both political and economic events. Therefore, it's virtually impossible to predict when and how the bubble will burst. It's duration likewise is not scientifically ascertainable. A correction can be either deflationary or inflationary or have characteristics of both. Today, in Indonesia, the financial instruments and real estate are deflating in price, while consumer prices are escalating at the most rapid rate in 30 years due to the depreciation of the rupiah. Indonesia is in the early stages of an inflationary depression--a not unheard of result of sustained Central Bank inflationary policy. Many believe price inflation only occurs with rapid growth. This is not so. Blame is misplaced. Rarely is the Central Bank and paper money blamed--unless a currency value goes to zero. In Indonesia the most vulnerable scapegoat has been the Chinese businessmen, now in threat of their lives and fleeing the country. A much more justifiable ``scapegoat'' is the IMF and the American influence on the stringent reforms demanded in order to receive the $43 billion IMF bailout. IMF policy on aggravates and prolongs the agony while helping the special interest rich at the expense of the poor. The IMF involvement should not be a distraction from the fundamental cause of the financial problem, monetary inflation, even if it did allow three decades of sustained growth. ``Crony capitalism'' was not the cause of Indonesia's trouble. Inflationism and political corruption allows crony capitalism to exist. It would be better to call it economic interventionism for the benefit of special interests--a mild form of fascism--than to abuse the free market term of capitalism. Any serious economic crisis eventually generates political turmoil, especially if political dissent has been held in check by force for any significant period of time. There should be no surprise to see the blood in the streets of Jakarta--soon to spread and build. Political events serve to aggravate and magnify the logical but subjectively sensitive declining currency values and the faltering economy. The snowballing effect makes the political crisis much more serious than the economic crisis since it distracts from the sound reforms that could restore economic growth. These circumstances, instead of leading to more freedom, invite marshal law for the purpose of restoring stability and the dangers that go with it. Errors in economic thinking prompt demands from the masses for more government programs to ``take care'' of the rapidly growing number of poor. Demands for more socialism and price controls results whether it's in education, medical care, unemployment benefits or whatever--all programs that Indonesia cannot afford even if they tried to appease the rioting populous. solutions attempted The IMF's $43 billion bailout promise has done nothing to quell the panic in the streets of Jakarta. If anything, conditions have worsened the Indonesians deeply resent the austere conditions demanded by the IMF. Since the U.S. is the biggest contributor to the IMF and the world financial and military cop, resentment toward the United States is equal to that of the IMF. The Indonesian people know they won't be helped by the bailout. They already see their jobs disappearing and prices soaring. The political and economic future, just a few months ago looking rosy, but it is now bleak beyond all description. Indonesians know what the American taxpayers know; the IMF bailout helps the rich lenders who for decades made millions but now want their losses covered by weak victims. Is there any wonder resentment and rage prevails in Indonesia? The U.S. has just sent a military delegation to study and obviously advise the Indonesian government regarding the law and order crisis now in process. Our officials say that we're there to watch that the Indonesian military do not abuse the rights of Indonesian citizens. Even if true, and well motivated, where did this authority come from for us to run to the scene of the crime--on the other side of the world and pretend we have all the answers. Proper authority or not put aside, the Indonesian people perceive even a few U.S. military advisors as a further threat to them. The U.S. is seen as an extension of the IMF and is expected to more likely side with the Indonesian military than with the demonstrators. No government likes to see any dissolution of government power even the questionable ones. It might encourage others unhappy with their own government. And it is not like the U.S. government is innocent and benign, considering our recent history at Kent State, Waco, and Ruby Ridge and the hundreds of no-knock entries made in error, causing loss of life, multiple injuries and destruction of property. Let us make sure our own government acts responsibly in all matters of law and order here at home before we pretend we can save the world--a responsibility not achievable even if motivated with the best of intentions. Effort to prop up an ailing economy after the financial bubble has been popped, prolongs the agony and increases the severity of the correction. Japan's bubble burst in 1989 and there is not yet any sign of the cleansing of the system of bad debt and mal-investment which is necessary before sound growth will resume. And Indonesia is embarking on the same predictable course. Restoration of free markets, and establishing sound monetary policy has not yet been considered. The people of Indonesia and the rest of the world should prepare for the worst as this crisis spreads. For Congress, the most important thing is to forget the notion that further taxing American workers to finance a bail-out, that won't work, is the worst policy of all for us to pursue. The Indonesian government had one idea worth considering under these very difficult circumstances. They wanted to replace their central bank with a currency board. It's not the gold standard, but it would have been a wise choice under current conditions. But the United States and the IMF insisted that in order to qualify for IMF funding this idea had to be rejected outright and the new central bank for Indonesia had to be patterned after the Federal Reserve with, I'm sure, ties to it for directions from Greenspan and company. A currency board would allow a close linkage of the rupiah to the dollar, its value controlled by market forces, and would have prevented domestic Indonesia monetary inflation--the principle cause of the economic bubble now collapsed. The shortcoming of a currency board is that the Indonesian currency and economy would be dependent on dollar stability which is far from guaranteed. refusal In the approximately 8 months since the crisis hit Indonesia there has been no serious look at the underlying cause--monetary inflation brought about by a central bank. Nor has any serious thought gone into the internationalization of credit as United States exports of billions of dollars, and thus our own inflation, to most nations of the world who hold these dollars in reserve and use them to further inflate their own currencies. Our huge negative trade balance and foreign debt is not considered by conventional wisdom to be relevant to the Asian currency problems, yet undoubtedly it is. True reform to deal with the growing worldwide crisis can only be accomplished by us first recognizing the underlying economic errors that caused the current crisis. The philosophy of the free market, holds a lot of answers, yet the difference between free market capitalism and interventionist political cronyism has not been considered by any of the world banking and political leaders currently addressing the exploding Southeast Asian crisis. Concern for personal liberty is not a subject associated with the crisis and is an ongoing casualty of past and current policy. A greater concern for individual liberty will be required if a positive outcome is to be expected from the fall-out of the Indonesian crisis. Let's hope we can get our priorities straight. Congress has an obligation not to worsen the crisis by capitulating to more bail-outs and to remain vigilant enough to keep the administration from accomplishing the same bail-out through Executive Orders outside the law. message What should the message be to the Congress and the American people regarding this sudden and major change in the economic climate in Indonesia? First and foremost is that since we operate with a fiat currency, as do all the countries of the world, we are not immune from a sudden and serious economic adjustment--at any time. Dollar strength and our ability to spend dollars overseas, without penalty, will not last forever. Confidence in the U.S. economy, and the dollar will one day be challenged. The severity of the repercussion is not predictable but it could be enormous. Our obligation, as Members of Congress, is to protect the value of the dollar, not to deliberately destroy it, in an attempt to prop up investors, foreign governments or foreign currencies. That policy will only lead to a greater crisis for all Americans. As the Asian crisis spreads, I would expect Europe to feel the crunch next. Unemployment is already at a 12% level in Germany and France. The events can be made worse and accelerated by outside events like a Middle Eastern crisis or a war between India and Pakistan both now rattling their nuclear weapons. Eventually though, our system of ``crony capitalism'' and fiat money system will come under attack. Our system of favoring industries is different than the family oriented favoritism of Suharto, but none-the-less is built on a system of corporate welfare that prompts constant lobbying of Congress and the Administration for each corporation's special interests. We have little to talk about as we preach austerity, balanced budgets and sound money to the current victims. Our day will come when we will humble ourselves before world opinion as our house of cards comes crashing down. We will all know we are on the right track when the people and our leaders are talking of restoring liberty to all equally, and establishing a sound money system that prevents the Fed from manufacturing money and credit out of thin air for the benefit of politicians, corporations and bankers who directly benefit.

Mr. PAUL

Mr. PAUL. Madam Chairman, I rise in opposition to the Chairman's amendment and in strong support of the amendment of the gentlewoman from New Jersey. There are two positions that one could take on this. We could have zero integration, which this amendment would do; or we could think about the market. The market would just allow it to exist. Earlier, somebody quoted Hamilton as being opposed to an integration of commerce in banking. Well, of course, at that particular time in history we had the Jeffersonians, and they were strongly in support of the market and even against central banking. So I think, considering all things, that I cannot get my 100 percent, and we certainly do not want zero. We need to move in a direction, so I would say this very modest request is very justified. I think this FDIC insurance is something we should be concerned about, but that is a different issue for the moment. I object to that, but I do not believe this will solve the FDIC problem. We have to think about how we got here. In the 1920s, the Federal Reserve created a lot of credit. They created a boom and a booming stock market and good times. Then the Federal Reserve raised the interest rates and there was a stock market crash and a depression. And out of the depression came the desire to regulate banking and commerce. That caused the depression, which was erroneous, because the cause of the depression was excessive credit and then a deflated bubble, which should be all laid at the doorstep of the Federal Reserve. This is the size of the Glass-Steagall Act, a few pages, in order to solve a problem that did not exist. But we have been living with this for all these years. And now, over these several years, we have been trying to solve the problem. Now, this is the size of the solution. This is H.R. 10, this is the version of the Committee on Commerce as well as the version of the Committee on Banking and Financial Services that went to the Committee on Rules. We need to look at the fundamental cause of our problems and not jump off a cliff and do the wrong thing. I strongly support the Roukema amendment.

Mr. PAUL

Mr. PAUL. Mr. Speaker, today the Congress will collectively move our nation two steps closer to a national police state by further expanding a federal crime and paving the way for a deluge of federal drug prohibition legislation. Of course, it is much easier to ride the current wave of federalizing every human misdeed in the name of saving the world from some evil than to uphold a Constitutional oath which prescribes a procedural structure by which the nation is protected from what is perhaps the worst evil, totalitarianism. Who, after all, and especially in an election year, wants to be amongst those members of Congress who are portrayed as soft on drugs or deadbeat parents irrespective of the procedural transgressions and individual or civil liberties one tramples in their zealous approach. Our federal government is, constitutionally, a government of limited powers. Article one, Section eight, enumerates the legislative areas for which the U.S. Congress is allowed to act or enact legislation. For every other issue, the federal government lacks any authority or consent of the governed and only the state governments their designees, or the people in their private market actions enjoy such rights to governance. The tenth amendment is brutally clear in stating ``The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.'' Our nation's history makes clear that the U.S. Constitution is a document intended to limit the power of central government. No serious reading of historical events surrounding the creation of the Constitution could reasonably portray it differently. Of course, there will be those who will hang their constitutional ``hats'' on the interstate commerce general welfare clauses, both of which have been popular ``headgear'' since the FDR's headfirst plunge into New Deal Socialism. The interstate commerce clause, however, was included to prevent states from engaging in protectionism and mercantilist policies as against other states. Those economists who influenced the framers did an adequate job of educating them as to the necessarily negative consequences for consumers of embracing such a policy. The clause was never intended to give the federal government carte blanche to intervene in private economic affairs anytime some special interest could concoct a ``rational basis'' for the enacting such legislation. Likewise, while the general welfare provides an additional condition upon each of the enumerated powers of the U.S. Congress detailed in Article I, Section eight, it does not, in itself, provide any latitude for Congress to legislatively take from A and give to B or ignore every other government-limiting provision of Constitution (of which there are many), each of which are intended to limit the central government's encroachment on liberty. Nevertheless, rather than abide by our constitutional limits, Congress today will likely pass H. Res. 423 and H.R. 3811 under suspension of the rules meaning, of course, they are ``non- controversial.'' House Resolution 423 pledges the House to ``pass legislation that provides the weapons and tools necessary to protect our children and our communities from the dangers of drug addiction and violence''. Setting aside for the moment the practicality of federal prohibition laws, an experiment which failed miserably in the so-called ``Progressive era'', the threshold question must be: ``under what authority do we act?'' There is, after all, a reason why a Constitutional amendment was required to empower the federal government to share jurisdiction with the States in fighting a war on a different drug (alcohol)--without it, the federal government had no constitutional authority. One must also ask, ``if the general welfare and commerce clause were all the justification needed, why bother with the tedious and time-consuming process of amending the Constitution?'' Whether any governmental entity should be in the ``business'' of protecting competent individuals against themselves and their own perceived stupidity is certainly debatable--Whether the federal government is empowered to do so is not. Being stupid or brilliant to one's sole disadvantage or advantage, respectively, is exactly what liberty is all about. Today's second legislative step towards a national police state can be found in H.R. 3811, the Deadbeat Parents Punishment Act of 1998. This bill enhances a federal criminal felony law for those who fail to meet child support obligations as imposed by the individual states. Additionally, the bills shifts some of the burden of proof from the federal government to the accused. The United States Constitution prohibits the federal government from depriving a person of life, liberty, or property without due process of law. Pursuant to this constitutional provision, a criminal defendant is presumed to be innocent of the crime charged and, pursuant to what is often called ``the Winship doctrine,'' the prosecution is allocated the burden of persuading the fact-finder of every fact necessary to constitute the crime . . . charged.'' The prosecution must carry this burden because of the immense interests at stake in a criminal prosecution, namely that a conviction often results in the loss of liberty or life (in this case, a sentence of up to two years). This departure from the long held notion of ``innocent until proven guilty'' alone warrants opposition to this bill. Perhaps, more dangerous is the loss of another Constitutional protection which comes with the passage of more and more federal criminal legislation. Constitutionally, there are only three federal crimes. These are treason against the United States, piracy on the high seas, and counterfeiting (and, as mentioned above, for a short period of history, the manufacture, sale, or transport of alcohol was concurrently a federal and state crime). ``Concurrent'' jurisdiction crimes, such as alcohol prohibition in the past and federalization of felonious child support delinquency today, erode the right of citizens to be free of double jeopardy. The fifth amendment to the U.S. Constitution specifies that no ``person be subject for the same offense to be twice put in jeopardy of life or limb . . .'' In other words, no person shall be tried twice for the same offense. However, in United States v. Lanza, the high court in 1922 sustained a ruling that being tried by both the federal government and a state government for the same offense did not offend the doctrine of double jeopardy. One danger of unconstitutionally expanding the federal criminal justice code is that it seriously increases the danger that one will be subject to being tried twice for the same offense. Despite the various pleas for federal correction of societal wrongs, a national police force is neither prudent nor constitutional. The argument which springs from the criticism of a federalized criminal code and a federal police force is that states may be less effective than a centralized federal government in dealing with those who leave one state jurisdiction for another. Fortunately, the Constitution provides for the procedural means for preserving the integrity of state sovereignty over those issues delegated to it via the tenth amendment. The privilege and immunities clause as well as full faith and credit clause allow states to exact judgments from those who violate their state laws. The Constitution even allows the federal government to legislatively preserve the procedural mechanisms which allow states to enforce their substantive laws without the federal government imposing its substantive edicts on the states. Article IV, Section 2, Clause 2 makes provision for the rendition of fugitives from one state to another. While not self-enacting, in 1783 Congress passed an act which did exactly this. There is, of course, a cost imposed upon states in working with one another than relying on a national, unified police force. At the same time, there is a greater cost to centralization of police power. It is important to be reminded of the benefits of federalism as well as the costs. There are sound reasons to maintain a system of smaller, independent jurisdictions--it is called competition and, yes, governments must, for the sake of the citizenry, be allowed to compete. We have obsessed so much over the notion of ``competition'' in this country we harangue someone like Bill Gates when, by offering superior products to every other similarly-situated entity, he becomes the dominant provider of certain computer products. Rather than allow someone who serves to provide values as made obvious by their voluntary exchanges in the free market, we lambaste efficiency and economies of scale in the private marketplace. Yet, at the same time, we further centralize government, the ultimate monopoly and one empowered by force rather than voluntary exchange. When small governments becomes too oppressive, citizens can vote with their feet to a ``competing'' jurisdiction. If, for example, I do not want to be forced to pay taxes to prevent a cancer patient from using medicinal marijuana to provide relief from pain and nausea, I can move to Arizona. If I want to bet on a football game without the threat of government intervention, I can move to Nevada. If I want my income tax at 4% instead of 10%, I can leave Washington, DC, for the surrounding state suburbs. Is it any wonder that many productive people leave DC and then commute in on a daily basis? (For this, of course, DC will try to enact a commuter tax which will further alienate those who will then, to the extent possible, relocate their workplace elsewhere). In other words, governments pay a price (lost revenue base) for their oppression. As government becomes more and more centralized, it becomes much more difficult to vote with one's feet to escape the relatively more oppressive governments. Governmental units must remain small with ample opportunity for citizen mobility both to efficient governments and away from those which tend to be oppressive. Centralization of criminal law makes such mobility less and less practical. For each of these reasons, among others, I must oppose the further and unconstitutional centralization of power in the national government and, accordingly, H. Res. 423 and H.R. 3811.

Mr. PAUL

Mr. PAUL. Mr. Chairman, Congress should reject HR 6, the Higher Education Amendments of 1998 because it furthers the federal stranglehold over higher education. Instead of furthering federal control over education, Congress should focus on allowing Americans to devote more of their resources to higher education by dramatically reducing their taxes. There are numerous proposals to do this before this Congress. For example, the Higher Education Affordability and Availability Act (HR 2847), of which I am an original cosponsor, allows taxpayers to deposit up to $5,000 per year in a pre-paid tuition plan without having to pay tax on the interest earned, thus enabling more Americans to afford college. This is just one of the many fine proposals to reduce the tax burden on Americans so they can afford a higher education for themselves and/or their children. Other good ideas which I have supported are the PASS A+ accounts for higher education included in last year's budget, and the administration's HOPE scholarship proposal, of which I was amongst the few members of the majority to champion. Although the various plans I have supported differ in detail, they all share one crucial element. Each allows individuals the freedom to spend their own money on higher education rather than forcing taxpayers to rely on Washington to return to them some percentage of their tax dollars to spend as bureaucrats see fit. Federal control inevitably accompanies federal funding because politicians cannot exist imposing their preferred solutions for perceived ``problems'' on institutions dependent upon taxpayer dollars. The prophetic soundness of those who spoke out against the creation of federal higher education programs in the 1960s because they would lead to federal control of higher education is demonstrated by numerous provisions in HR 6. Clearly, federal funding is being used as an excuse to tighten the federal noose around both higher and elementary education. Federal spending, and thus federal control, are dramatically increased by HR 6. The entire bill has been scored as costing approximately $101 billion dollars over the next five years; an increase of over 10 billion from the levels a Democrat Congress Congress authorize for Higher Education programs in 1991!. Of course, actual spending for these programs may be greater, especially if the country experiences an economic downturn which increases the demand for federally-subsidized student loans. Mr. Chairman, one particular objectionable feature of the Higher Education Amendments is that this act creates a number of new federal programs, some of which where added to the bill late at night when few members where present to object. The most objectionable program is ``teacher training.'' The Federal Government has no constitutional authority to dictate, or ``encourage,'' states and localities to adopt certain methods of education. Yet, this Congress is preparing to authorize the federal government to bribe states, with monies the federal government should never have taken from the people in the first place, to adopt teacher training methods favored by a select group of DC-based congressmen and staffers. As HR 6 was being drafted and marked-up, some Committee members did attempt to protect the interests of the taxpayers by refusing to support authorizing this program unless the spending was offset by cuts in other programs. Unfortunately, some members who might have otherwise opposed this program supported it at the Committee mark-up because of the offset. While having an offset for the teacher training program is superior to authorizing a new program, at least from an accounting perspective, supporting this program remains unacceptable for two reasons. First of all, just because the program is funded this year by reduced expenditures is no guarantee the same formula will be followed in future years. In fact, given the trend toward ever-higher expenditures in federal education programs, it is likely that the teacher training program will receive new funds over and above any offset contained in its authorizing legislation. Second, and more importantly, the 10th amendment does not prohibit federal control of education without an offset, it prohibits all programs that centralize education regardless of how they are funded. Savings from defunded education programs should be used for education tax cuts and credits, not poured into new, unconstitutional programs. Another unconstitutional interference in higher education within HR 6 is the provision creating new features mandates on institutes of higher education regarding the reporting of criminal incidents to the general public. Once again, the federal government is using its funding of higher education to impose unconstitutional mandates on colleges and universities. Officials of the Texas-New Mexico Association of College and University Police Departments have raised concerns about some of the new requirements in this bill. Two provisions the association finds particularly objectionable are those mandating that campuses report incidents of arson and report students referred to disciplinary action on drug and alcohol charges. These officials are concerned these expanded requirements will lead to the reporting of minor offenses, such as lighting a fire in a trash can or a 19-year-old student caught in his room with a six-pack of beer as campus crimes, thus, distorting the true picture of the criminal activity level occurring as campus. The association also objects to the requirement that campus make police and security logs available to the general public within two business days as this may not allow for an intelligent interpretation of the impact of the availability of the information and may compromise an investigation, cause the destruction of evidence, or the flight of an accomplice. Furthermore, reporting the general location, date, and time for a crime may identify victims against their will in cases of sexual assault, drug arrests, and burglary investigations. The informed views of those who deal with campus crime on a daily basis should be given their constitutional due rather than dictating to them the speculations of those who sit in Washington and presume to mandate a uniform reporting system for campus crimes. Another offensive provision of the campus crime reporting section of the bill that has raised concerns in the higher education community is the mandate that any campus disciplinary proceeding alleging criminal misconduct shall be open. This provision may discourage victims, particularly women who have been sexually assaulted, from seeking redress through a campus disciplinary procedures for fear they will be put ``on display.'' For example, in a recent case, a student in Miami University in Ohio explained that she chose to seek redress over a claim of sexual assault ``* * * through the university, rather than the county prosecutor's office, so that she could avoid the publicity and personal discomfort of a prosecution * * *'' Assaulting the privacy rights of victimized students by taking away the option of a campus disciplinary proceeding is not only an unconstitutional mandate but immoral. This bill also contains a section authorizing special funding for programs in areas of so-called ``national need'' as designated by the Secretary of Education. This is little more than central planning, based on the fallacy that omnipotent ``experts'' can easily determine the correct allocation of education resources. However, basic economies teaches that a bureaucrat in Washington cannot determine ``areas of national need.'' The only way to know this is through the interaction of students, colleges, employers, and consumers operating in a free- market, where individuals can decide what higher education is deserving of expending additional resources as indicated by employer workplace demand. Mr. Chairman, the Higher Education Amendments of 1998 expand the unconstitutional role of the federal government in education by increasing federal control over higher education, as well as creating a new teacher training program. This bill represents more of the same, old ``Washington knows best'' philosophy that has so damaged American education over the past century. Congress should therefore reject this bill and instead join me in working to defund all unconstitutional programs and free Americans from the destructive tax and monetary policies of the past few decades, thus making higher education more readily available and more affordable for millions of Americans.

Mr. PAUL

Mr. PAUL. Mr. Speaker, I rise today to speak for 80 percent of Americans who support the National Right to Work Act, H.R. 59. The National Right to Work Act repeals those sections of Federal law that give union officials the power to force workers to pay union dues as a condition of employment. Compulsory unionism violates employers' and employees' constitutional rights of freedom of contract and association. Congress has no constitutional authority to force employees to pay union dues to a labor union as a condition of getting or keeping a job. Passage of the National Right to Work Act would be a major step forward in ending Congress' illegitimate interference in the labor markets and liberating America's economy from heavy-handed government intervention. Since Congress created this injustice, we have the moral responsibility to work to end it, Mr. Speaker. The 80 percent of Americans who support right-to-work deserve to know which Members of Congress support worker freedom. I, therefore, urge the congressional leadership, the majority of which have promised to place a National Right to Work Act on the floor, to fulfill their promise to the American people and schedule a time certain for a vote on H.R. 59.

Mr. PAUL

Mr. PAUL. Mr. Speaker, I would like to inquire, is either gentleman opposed to the legislation?

Mr. PAUL. Mr. Speaker, I yield myself such time as I may consume to point out, once again, that up until just very recently in our history, it was assumed that the Federal Government did not have this authority. To assume that we do have this, I guess that is why we call it a war, to say that this is national defense. But prohibition, obviously, when they passed that amendment to the Constitution, recognized that the Congress could not pass laws. And like I mentioned in 1937, when Roosevelt decided that we should attack medical marijuana, that he would do it through raising taxes. So it is only in recent history that we have decided that this is a Federal project. The record is just not very clear it has been very successful. I am concerned not only about the drug usage, obviously, and the fact that the war has failed, but with those things that are so negative when it comes to violation of liberties. The other day there was a story in the media that said there was a child suffering from an acute attack of asthma. Now, there was another asthmatic in the class, and she did what seemed to come natural to her: She went and gave her a whiff of her nebulizer and the girl immediately came out of her acute asthma attack. She was quickly apprehended under a Federal statute saying that she was disobeying the Federal law on the use of drugs. Now, it might be advisable to caution a young child about giving medications to another, but this was very obvious and very clear. She happened to have been a hero with the other students and she was certainly a hero for the girl she helped.

Mr. PAUL. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, as I said, in most of our history, the control of drug abuse has never been a Federal issue. This is only very recent. This does not diminish one's concern. It is respecting the Constitution. It is also emphasizing the fact that the more we have centralized our control and the more that we have tried to enforce the thing at the national level, the worse the problem has gotten. I have many conservatives say we have an educational problem, and all they want to do is throw more money at it. I cannot see how this is different. Yes, we have a major problem. But it gets worse, and all we do is throw more money at it with exactly the same programs. My goal today is just to suggest, just to bring it to the Congress' attention, that possibly we are not doing the right things. If we would ever come to admitting that, then maybe we will not have to suffer the abuse of how the war on drugs goes awry. For instance, we have had this war on drugs, and there is no evidence even that we have been able to keep drugs out of our prisons. So maybe there is something we are doing wrong. Maybe we are treating a symptom rather than the cause of the problem. Maybe the cause is not legislatively correctable. That is a possibility. Obviously there is a problem there, but we need to think about it. We need to take a consideration, and not ever to write off those of us who might say we do not endorse the current approach as being one that might not be concerned about the issue. Obviously I am concerned. I have five children, and I have 13 grandchildren. I am a physician. I have a great deal of concern. But I have also been involved and I have seen people who have suffered, and, therefore, I have probably a slightly different approach to the problem. But I do think that we ought to look for a minute at the harm done with the war on drugs. So often there are victims from the war on drugs that go unnoticed. How often have we seen on television, how often have we read in our newspaper of a drug bust with hooded FBI agents and hooded DEA agents barging into the wrong apartment and really tearing the place up, confiscating property of people who have never committed a crime? Why are we at the point now that we permit the war on drugs to be fought without due process of law? All they have to be is a suspect. All we have to do is have cash these days, and the government will come and take it from us. Then we have to prove our innocence. That is not the Constitution. We have gone a long way from the due process. Our job here is to protect the civil liberties of individuals. Yes, we ought to try to influence behavior. Yes, we ought to make laws against illegal behavior; national, when necessary, but local when the Constitution dictates it. At the rate we are going, we are making very, very little progress. I have a suspicion that there are motivations behind the invasion of privacy. Because government so often likes to know what people are doing, especially in the financial area, this has been a tremendous excuse to accuse anybody who spends anything in cash of being a drug dealer, because they want to know where the cash is. This is part of the IRS collection agency, because they are worried about collecting enough revenues. Yet we carelessly say, well, a little violation of civil liberties is okay, because we are doing so much good for the country and we are collecting revenues for the government. But we cannot casually dismiss these important issues, especially, if anything I suggest, that this war on drugs is, or the problem of drugs in perspective is not nearly what some people claim it to be, and that many people are dying from other problems rather than these. I would like to suggest in closing some of the things that we can consider. First, let us consider the Constitution, for instance. We have no authority to create a Federal police force. That is not in the Constitution. So we ought to consider that. It is a State problem. It is a State law enforcement problem. Most of our history, it was dealt that way. I think education is very important; people who know what is going on. We should, if anything, be emphasizing the educational process. Possibly my medical background influences me into what I am going to say next; and that is, could we conceive of looking at some of this problem of addiction as a disease rather than a criminal act? We do this with alcohol. Maybe that would help the problem. Is it conceivable that we are looking at a symptom that the drug problem, the drug craze, is a reflection of moral values in the society? We cannot get rid of teenage illegitimacy by writing a national law against teenage pregnancy. We are not likely, we have not been able to get rid of drug usage, teenage drug usage, by writing national laws and coming down with the armed might of the Federal Government. So I do not think the current process is going to work. Kids go on drugs because they are seeking happiness, they are alone, they are in broken families. This is a problem that will not be solved by more laws and a greater war on drugs. We have 80,000 Federal policemen now carrying drugs. Character is what is needed. Laws do not create character. This does not dismiss us from expressing concern about this problem, but let us not make the problem worse. In 1974, Switzerland passed a law that said that the doctor could prescribe medication for addicts. I, as a physician, if an addict comes into my office and I agree to give him drugs which would support his habit, because I figure for him to go out on the street and shoot somebody for it is a little worse than me trying to talk him into a program by giving him drugs for a while, I am a criminal. I am a criminal today if I decide that somebody should use or could use marijuana if they are dying with cancer or AIDS and they are dying of malnutrition because they cannot eat. There should be a little bit of compassion in this movement. Again, we cannot distract from the serious problem of the drug war, but I do beg and plead for my colleagues to just look at the truth. Let us read the news carefully, let us look at the Constitution, like we do when it is convenient, and let us consider another option. It cannot be any worse than what we are doing. We have too many people on drugs, and this resolution makes my point. The war on drugs has failed. Let us do something different. Let us not pursue this any longer. Mr. Speaker, I reserve the balance of my time.

Mr. PAUL. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in opposition to this bill, not so much in any objection to what the goals are. The goals are very laudable. The first time I read this resolution, I was in agreement with everything until the very end. Then I had some disagreements with it. I have taken this time so I would have adequate time to explain my position and why I oppose this bill. Obviously, this country is facing a serious problem with drugs. As a physician, I can attest to it. We have major problems in this country, something should be done. But I thought it was necessary to take some time to point out that what we have done for 20 to 25 years has not been all that good. And I see this resolution as an endorsement of the status quo, not an introduction of one single new idea about how to approach this problem. And it is for this reason that I have taken this time to try to get people to think about maybe an alternative some day that we might look at, because so far the spending of the money and the abuse of our civil liberties that has occurred with the war on drugs has not accomplished a whole lot. I object strongly to the Federal approach to law enforcement. That is one of the major issues I have contention with. When we think about when we tried to make a better world in 1919, and we thought we should prohibit certain substances being used in this country, in those days we had enough respect for the Constitution that we actually believed then that we should amend the Constitution, and we did and we had an experiment and after 14 years of a failed program, we repealed that amendment on alcohol. In 1937, it was decided that possibly we should restrict marijuana, even for medical use, and even then it was not assumed that this was a Federal prerogative. It was not banned, it was not outlawed. It was still assumed that it was the responsibility of the States to deal with problems of drugs and marijuana and law enforcement. In 1937, and I am sure some of my conservative colleagues might be interested in this because it was the great FDR who decided to impose a great tax on marijuana, putting $100 tax on a pound of marijuana, essentially making it illegal. And even today those States who would like to legalize marijuana even for the sick and dying AIDS patients and the cancer patients are not even permitted to. It is because we have carelessly assumed that all regulation and all controls and all policing activities should be done here in Washington. I am here just to suggest quite possibly our attack on drugs has not been correct, that we have possibly made some mistakes. Maybe we spent some money that we have not gotten our dollars' worth. Maybe we are going in the wrong direction. It is estimated that we have spent over $200 billion in the last 25 years fighting drugs. And yet it is the same old thing again. Play on the emotions of the people, condemn drug usage, which I do. As I said as a physician, I know they are horrible. But as a politician and somebody in the legislature, we should think about the efficiency and the effectiveness of our laws. The evidence quite frankly is not there to show that we are doing a very good job. And even though I commend the individuals who are promoting this legislation, the motivations are there, the desires are there, but I think, in my view, that it is the same old program of the Federal war on drugs that has a lot of shortcomings. The first ``whereas'' of this resolution, I strongly agree with. It says, ``Whereas recently revealed statistics demonstrate America is not winning the battle to keep young Americans drug-free.'' This is my point. This is conceded by everyone. We are not winning this fight, so why pursue the same policies over and over again, and especially since there are some shortcomings with the policy. Not only have they not been effective, there are some serious shortcomings, shortcomings on civil liberty and property rights and other things. We ought to put the war on drugs in a proper perspective. Yes, it is easy to talk about a heroin addict and a crime committed and people narrowing in on one instance, but we ought to look at this in a proper manner. There is talk that there are 20,000 deaths with illegal drugs. But that, in the best of my estimates, includes all the violent drugs which, to me, are a consequence of the war on drugs. I have statistics that say there is about 6,000 people who die from overdosing and taking illegal drugs. A horrible figure. It is horrible. Nobody should be using these drugs. But let us put this in a different perspective. We lose 37,000 people on highways every year, government-managed highways. And 36,000 people die each year from guns. But we do not take the guns away from the innocent people because there are gun accidents and gun deaths. It is 36,000 in comparison to 6,000. There is one other figure that is astounding that was in the media, recorded in the media here the last couple of days. The medical profession has a responsibility here. It is estimated that we are losing 106,000 people a year. These are reports from 1994; 106,000 a year from drug reactions, legal prescription drugs coming from doctors. If we want to go after a problem, let us go after the highways, let us go after the guns, let us go after the drug reaction. What about alcohol? There are 200,000 deaths, approximately, from alcohol. But do we come here and propose that we go back to prohibition? No. We do not. It is a serious problem. It is really the big problem. Cigarette killing may be up to 400,000 a year. But if we make the suggestion that we want to go after them, then we have a President that says, yes, we will go after the kids that are taking a puff on the cigarette and apply the same rules. There are 10 million new cases of sexually transmitted diseases diagnosed each year. It is probably higher because most of those cases do not get reported. So that is a serious problem. I mean, look for serious problems. To dwell on the drug war and casually and carelessly violate civil liberties, as we so often do, and have confiscation and seizure of property that we just blow it off because we are fighting the drug war, I think we are going in the wrong direction. We need some new ideas and new proposals on this drug war. I hope today to have time to make some of these suggestions on what we might do about the drug war. Former HEW Secretary Joseph Califano said, not too long ago, he was comparing the drug war to the problem of alcohol, he said: The drug war is a grain of sand compared to alcohol. If we look at the college issue, the overwhelming drug that is a problem on college campuses is alcohol. Yet, 99 percent of our concerns and our expression of horror is directed toward a narrower group of people; that is, on the illegal drugs. Why might it be that we dwell on the illegal drugs? Alcohol of course is legal, but why would it be that maybe this Congress might not be as aggressive against the abuses of alcohol and the deaths? If we have compassion, should we show less compassion to the 200,000 people dying of alcohol deaths or the 400,000 dying from cigarette deaths? But we do. It just happens that those who produce alcohol happen to come to Washington quite frequently. They make donations to candidates. They have a lobby. They do have a presence here in Washington. Not only those who make the alcohol, but what about the hotels or the restaurants? I mean, if we even thought about doing anything or saying anything about alcohol, of course we would hear from the hotels and the restaurants, and maybe rightfully so, if we argue that people have a right to have a glass of wine with their dinner in their hotel or restaurant. But the point I am trying to make is that we dwell on certain things out of proportion to its danger. Also, one reason why we might not talk about the tremendous abuse with alcohol is the fact that, quite possibly, a few Members of Congress actually participate in using such a thing. There are now probably 13 million people in this United States suffering from abuse or alcoholism, a serious, serious number. Now, there is a lot more that has to be said, especially if we can someday open up the debate and go in a new direction, have some new ideas dealing with the drug program. But I want to pause here for a minute, and I want to emphasize just one thing; that is, that, constitutionally, it was never intended that the Federal Government fight the war on drug. And they never did until recent years. For 25 years now, we have done it. We have spent $200 billion. It is failing, and we are not willing to stand up and say, hey, maybe we are doing something wrong. Maybe we ought to have another idea. Maybe we ought to have a new approach. I think when we talk about not only looking at this outer perspective of other problems that we have in the country, but also the serious consequences of the drug laws which we all should be concerned about because it involves property rights and civil liberty rights, maybe we can get around to the point of saying maybe could there be a new approach. Mr. Speaker, I reserve the balance of my time.

Mr. PAUL. Mr. Speaker, I would like to claim the time in opposition.

Mr. PAUL

Mr. PAUL. Mr. Speaker, I rise in support of this legislation. It makes no sense to pay somebody, pay for free needles to do something that is currently illegal. It is very questionable whether it will do any good. As a physician, I would have to agree with the opposition that a clean needle certainly is better than a dirty needle. I do not think there is a question about that. But I do believe that there is a message sent that if we provide free needles to do something that we are condoning or encouraging it. But there is also a strong moral as well as an economic argument against this. What we are talking about here is lowering costs of risky behavior. We are saying that we will pay for the needles to perform this risky behavior. But there is another much larger element that has not been discussed so far, and that has to do with the concept that all risky behavior be socialized; that is, through the medical system, it is assumed that those who do not participate in risky behavior must pay for the costs of the risky behavior, whether it has to do with cigarettes or whether it has to do with drugs or whether it has to do with any kind of safety. So, therefore, the argument is that we have to save money in medical care costs by providing free needles. But there is another position, and that is that we might suggest that we do not pay for free needles and we might even challenge the concept that we should not be paying people and taking care of them for risky behavior, whether it is risky sexual behavior or risky behavior with drugs. I think this is very clearly the problem, and I do not believe we should be socializing this behavior because, if we do, we actually increase it. If we lower the cost of anything, we increase the incidence of its use. So if the responsibility does not fall on the individual performing dangerous behavior, they are more likely to, and this is just part of it, the idea that we would give them a free needle. But there is a moral argument against this as well. Why should people who do not use drugs or do not participate in dangerous sexual procedures and activities have to pay for those who do? And this is really the question, and there is no correct moral argument for this. And the economic argument is very powerful. It says that if we lower the cost, we will increase this behavior. But this is not only true when we are dealing with drugs. It has to do with cigarettes. I mean, the whole tobacco argument is dealing with the same issue, that we have to pay for the costs of people who get sick from dangerous behavior with cigarettes and, therefore, we have to come in and regulate the tobacco companies and nobody can assume responsibility for themselves. Same thing with alcohol and safety. This is the reason we have so much government regulation dealing with helmet laws and seat belts and buzzers and beepers and air bags. So this concept has to be dealt with if we are ever to get to the bottom of this. So, Mr. Speaker, I strongly support this legislation.

Mr. PAUL

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

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

Mr. PAUL. Mr. Chairman, this amendment is not a complex amendment. It merely states that Social Security numbers cannot be used to identify the individuals who will be participating in this program. This is a common practice, obviously, today. The Social Security number is used just for about everything. As a matter of fact, many Americans think way too often. There are 40 Federal programs now where the Social Security number is required. Not only that, the Federal Government now has been mandating the uses of the Social Security number for similar purposes even on State programs such as obtaining our driver's license. The concern that I have and that many Americans have is that government is too intrusive, wants too many records and knows too much about everybody. The government and nongovernment people can get our names and they can get our Social Security numbers and find out more about us than we know about ourselves, and that is not the intent of our Constitution. It certainly is not the intent of the Privacy Act. The Privacy Act concerns were expressed through this legislation in 1974 stating that, yes, we have overstepped our bounds, there is too much intrusiveness, and we are moving in the direction of a national identification card, something that is unknown and should be unheard of in a free society. We should not have an identity card to carry our papers to get jobs, open bank accounts, move about the country, but we are moving rapidly in that direction. This is a token effort to make this point and require the government to use some other identification method for this program. It can be done. There is nothing sacred about the Social Security number. The program can be run without the use of Social Security. I would like to just read very briefly some passages from the Privacy Act of 1974 to make my colleagues stop and think about what we are doing. ``It shall be unlawful for any Federal, State or local government agency to deny any individual any right, benefit or privilege provided by law because of such individual's refusal to disclose his Social Security number.'' If one does not give his Social Security number, one is in big trouble in this country. One cannot even get out of the hospital if one is born without a Social Security number, and one cannot open up a savings account for a child if one does not have a Social Security number. One is not even allowed to die at this time without a Social Security number, because one needs a Social Security number on one's death certificate. Talk about cradle to grave. ``Any Federal, State or local government agency which requests an individual disclose his Social Security number shall inform that individual whether that disclosure is mandatory or voluntary, by what statutory or other authority the number is listed and what uses will be made of it.'' We do not have that happening. Numbers are just demanded, and too many people have complied with it, and we go along with it, but more and more Americans are getting upset with this monitoring of everything that we do through the Social Security number. Every single government program is now requiring it. Like I said, there are 40, 40 programs. Immigration, think about how the immigration programs are monitored through Social Security numbers. There have been attempts to use the Social Security number to monitor people in their voting. We do not need this. We do not need more government surveillance in promoting this kind of a program. The program can survive, can work. Some would argue, well, possibly, just possibly, the efficiency of the program may be diminished. That will be the argument that I will probably hear. The efficiency of the program will be diminished. Well, if this is the argument, then we are saying that we are here to protect the efficiency of the State. I see an important role for us to be here is to protect the privacy and the civil liberties of the citizen. So we are in conflict. Which should our role be, to protect privacy and civil liberties, or is it to protect the efficiency of the State? Well, it is not difficult for me to figure that out, and it is not like I am saying this program would not exist, it is just saying that we will put a small amount of surveillance on this where the government is not so casual in expanding its role for the Social Security number. In the Privacy Act of 1974, in the findings, they made a comment which I think is very important, and this is in 1974 when it was not really bad. ``The Congress finds the opportunities for an individual to secure employment, insurance and credit and his right to due process and other legal protections are endangered by the misuse of certain information systems.'' I ask my colleagues to support this amendment. This is a positive amendment; this is an amendment to protect civil liberties of every American.

Mr. PAUL. Mr. Speaker, I thank the gentleman for yielding me this time. I rise in support of this rule. It is obviously a very fair rule because I am allowed to offer an amendment later on, so I am pleased to be able to vote for this rule. I have an amendment that I am going to offer in Title I which will be designated so that the Social Security number cannot be used for the electronic personal identifier for any of the programs in this educational bill. The American people have become very worried about how often the Social Security number is being used as a national identification number, and we are working quickly toward a time where we have a national identification card. We certainly have abused the Social Security number as being the number. It was never intended that way. That is not what was intended when the Social Security was started that this number would be a universal number for everything. In 1974, it was stated rather explicitly that the Social Security number should not be used for programs like this, and I would like to just quote the Privacy Act of 1974: ``It shall be unlawful for any Federal, State or local government agency to deny any individual any right, benefit or privilege provided by law because of such individual's refusal to disclose his Social Security number.'' I think this is a good idea, because today we are very much aware of the fact that if a company, if a loaning company, or if one is going into a store to buy something, and they get one's name and one's Social Security number, one knows that they can call up more information about somebody than they know about themselves. I think this is a serious threat to the privacy of every American citizen, and we should be cautious about using the Social Security number. It is being used all the time. Mr. Speaker, prior to coming to this Congress, I was an obstetrician delivering babies, and babies cannot leave the hospital these days without a Social Security number. So they are born, get a Social Security number, they do not leave the hospital without it, and do my colleagues know that one cannot have a death certificate without a Social Security number? They are everyplace. It is an intrusion on our privacy. We do not need to use a Social Security number. When I was in the Air Force, we used to have an identification number, but now, today, it is the Social Security number. Not too many years ago a law was passed here in the Congress that mandates that each State licensing agent for our automobile says that one has to have a Social Security number. So now they will be cross-checking with Social Security number and all of our driver's license numbers. We are losing our privacy in this country. The American people know it. We do not need this number to be used in this program for it to be successful, and we should move very cautiously, and I hope I can get support for this amendment so that we do not use the Social Security number as the electronic personal identifier.

Mr. PAUL

Mr. PAUL. Mr. Speaker, I ask unanimous consent to claim the time of the gentleman from North Carolina (Mr. Jones).

Mr. PAUL

Mr. PAUL. Mr. Speaker, the big question is how history will play the current financial situation if all the great wealth accumulated in the last 10 years dissipates in a financial collapse. According to an article in The New Republic, Greenspan is not only held in high esteem on Wall Street, he is seen as Godlike. One trader is quoted as saying, ``When things go well, I hold Greenspan's picture between my hands and say, thank you. When things go poorly, I also take the photo in my hands and pray.'' And he is not alone on Wall Street in heaping praise on Greenspan. This comes as close to idolatry as one can get. Alan Greenspan took over the Fed a few months before the stock market crash of October, 1997. In the 10 years that Greenspan has headed the Fed, $2 trillion of new credit has been created as measured by M3. Banks threatened by bankruptcy in the early 1990s received generous assistance from the Fed policy of low interest rates and rapid credit expansion as a response to the recession of 1991. Fed fund rates were held at 3 percent for well over a year. This generous dose of Fed credit has fueled the 5-year superboom on Wall Street. We are endlessly told no inflation exists. But inflation is strictly and always a monetary phenomenon and not something that can be measured by a government consumer or producer price index. Even so, there currently is significant price inflation for the fancy homes throughout the country, especially in the New York and Connecticut areas influenced by the New York financial center. CEO compensation is astronomically high, while wages for the common man have been held in check. The cost of all entertainment is not cheap and rises constantly. Art prices are soaring, as is the price of tickets to athletic events. Buying stocks with a 1.8 percent dividend yield is not cheap. These prices are inflated. The cost of education, medicine, and general services are expensive and rising. In spite of Government reports showing food prices are not rising, many constituents I talk to tell me food prices are always going up. It seems every family has difficulty compensating for the high cost of living and taxes are always inflating. There is no doubt that many Americans know the salaries of the CEOs, athletes and entertainers are astronomically high. The wages of the average working man, though, has not kept up. Workers feel poorer and resentment grows. Even with all of Wall Street's euphoria, Main Street still harbors deep concern for their financial condition and the future of the country. Many families continue to find it difficult to pay their bills, and personal bankruptcies are at a record high at 1,400,000 per year. Downsizing of our large corporations continue as many manufacturing jobs are sent overseas. This current financial bubble started in mid-1982. At that time, the money supply, as measured by M3, was $2.4 trillion. Today it is over $5.5 trillion. That is a lot of inflation, and money supply growth is currently accelerating. Although the money supply has been significantly increased in the past 16 years and financial prices as well as other prices have gone up, Government officials continue to try to reassure the American people that there is no inflation to worry about because price increases, as measured by the Government's CPI and PPI, are not significantly rising. Stock prices, though, are greatly inflated. If we had an average valuation of the Dow Jones Industrials for the past 87 years, as measured by the PE ratios, the Dow would be a mere 4,100 today, not over 9,000. And the Dow would be much lower yet if we took the average price-to-dividend ratio or the price-to-book ratio. The NASDAQ is now selling at 85 times earning. There is no doubt that most stock prices are grossly inflated and probably represent the greatest financial bubble known in history. A lot of foreign money has been used to buy our stocks, one of the consequences of computer-age financial technology and innovations. Our negative trade balance allows foreign governments to accumulate large amounts of our treasury debt. This serves to dampen the bad effect of our monetary inflation on domestic prices, while providing reserves for foreign central banks to further expand their own credit. Think of this: Money can be borrowed in Japan at Depression-era rates of 1 percent and then reinvested here in the United States either in more treasury debt earning 5 or 6 percent, or reinvested in our stock market, which is currently climbing at a 20 percent annualized rate. This sounds like a perfect deal for today's speculators, but there is nothing that guarantees this process will continue for much longer. Perfect situations never last forever. Some of the euphoria that adds to the financial bubble on Wall Street and internationally is based on optimistic comments made by our government officials. Political leaders remind us time and again that our budget is balanced and the concern now is how to spend the excess. Nothing could be further from the truth, because all the money that is being used to offset the deficit comes from our trust funds. In other words, it's comparable to a corporation stealing from its pension fund in order to show a better bottom line in its day-to-day operations. Government spending and deficits are not being brought under control. Tax rates are at historic highs, and all government taxation now consumes 50 percent of the gross national income. It is now commonly believed that the East Asian financial crisis is having no impact on our economy. But it's too early to make that kind of an assessment. Our president remains popular, according to the polls, but what will it be like if there's any sign of economic weakness? There could then be a lot of ``piling on'' and finger pointing. problems and victims The basic cause of any financial bubble is the artificial creation of credit by a central bank (in this case our Federal Reserve). Artificially creating credit causes the currency to depreciate in value over time. It is important to understand the predictable economic problems that result from a depreciating currency: 1. In the early stages it is difficult to forecast exactly who will suffer and when. 2. Inflated currency and artificially low interest rates result in mal-investment that produces over capacity in one area or another. 3. Wealth generally transfers from the hands of the middle-class into the hands of the very wealthy. (The very poor receiving welfare gain a degree of protection, short of a total destruction of the currency.) 4. Prices indeed do go up, although which prices will go up is unpredictable, and the CPI and PPI can never be a dependable measurement of a monetary policy driven by loose credit. 5. The group that suffers the very most is the low-middle-income group (those willing to stay off welfare, yet unable to benefit from any transfer of wealth as stagnant wages fail to protect them from the ravages of the rising cost of living). There are probably several reasons why this current economic boom has lasted longer than most others. The elimination of the Soviet threat has allowed a feeling of optimism not felt in many decades, and there has subsequently been tremendous optimism placed on potential economic development of many world markets in this age of relative peace. There is also very poor understanding regarding economic interventionism, the system most nations of the world accept today. Today's interventionism is not close to a free market. The great Austrian economist Ludwig von Mises consistently pointed out that interventionism always leads to a form of socialism, which then eliminates the apparent benefits of interventionism. A good example of how interventionism leads to the destruction of a market can be seen in the recent tobacco fiasco. First, the tobacco industry accepted subsidies and protectionism to build a powerful and wealthy industry. Then, having conceded this ``nanny'' role to the government, Big Tobacco had no defense when it was held liable for illnesses that befell some of the willing users of tobacco products. Now, the current plan of super taxation on tobacco users will allow the politicians to bail out the individual farmers who may be injured by reduced use of tobacco products (destruction of the market). This half- trillion-dollar tax proposal hardly solves the problem. Just as in the 1920's today's productivity has fooled some economists by keeping prices down on certain items. Certainly computer prices are down because the price of computer-power has dropped drastically, yet this should not be interpreted as an ``absence'' of inflation. Innovation has kept prices down in the computer industry, but it fails to do so when government becomes overly involved as it has in other technological areas, such as medical technology, where prices have gone up for services such as MRIs and CAT scans, not down. learn from japan The most important thing to remember is that perceptions and economic conditions here can change rapidly, just as they did last summer in the East Asian countries with the bursting of their financial bubble. They are now in deep recession. Even though Japan first recognized signs of difficulty nine years ago, their problems linger because they have not allowed the liquidation of debt, or the elimination of over capacity, or the adjustment for real estate prices that would occur if the market were permitted to operate free of government intervention. The U.S. did the same thing in the 1930s, and I suspect we will do exactly what Japan is doing once our problems become more pressing. With our own problems from the inflation of the last 15 years now becoming apparent, their only answer so far is to inflate even more. In its effort to re-energize the economy, the Bank of Japan is increasing its reserves at a 51 percent rate. This may be the greatest effort to ``inflate'' and economy back to health in all of history. Japan has inflated over the years and will not permit a full correction of their mal-investment. The Bank of Japan is doing everything possible to inflate again, but even with interest rates below 1 percent there are few takers. OECD measurements, the M1 and quasi-money have been increasing at greater than 20 percent per year in East Asia. In the United Stats, M3 has been increasing at 10 percent a year. It is estimated that this year the U.S. will have a $250 billion current account deficit-- continued evidence of our ability to export our inflation. We are now the world's greatest debtor, with an approximately $1 trillion debt to foreign nations. Although accumulation of our debt by foreign holders has leveled off, it has not dropped significantly. The peak occurred in mid-1997--today these holding are slightly lower. the cruelest tax of all This process of deliberately depreciating a currency over time (inflation) causes a loss in purchasing power and is especially harmful to those individuals who save. AIER (American Institute for Economic Research) calculates that 100 million households since 1945 have lost $11.2 trillion in purchasing power. This comes out to $112,000 per household, or put another way, over 5 decades each one of these households lost $2,200 every year. Although many households are feeling very wealthy today because their stock portfolios are more valuable, this can change rather rapidly in a crash. The big question is what does the future hold for the purchasing power of the dollar over the next 10 or 20 years? the end in sight? Reassurance that all is well is a strategy found at the end of a boom cycle. Government revenues are higher than anticipated, and many are feeling richer than they are. The more inflated the stock market is as a consequence of credit creation, the less, reliable these markets are at predicting future economic events. Stock markets can be good predictors of the future, but the more speculative they become, the less likely it is the markets will reveal what the world will be like next year. The business cycle--the boom-bust cycle of history--has not been repealed. The psychological element of trust in the money, politicians, and central bankers can permit financial bubbles to last longer, but policies can vary as well as perceptions, both being unpredictable. central bankers The goal of central bankers has always been to gain ``benefit'' from the inflation they create, while preventing deflation and prolonging the boom as long as possible--a formidable task indeed. The more sophisticated and successful the central bankers are as technicians, the larger the bubble they create. In recent years, central bankers have had greater ``success'' for several reasons. First, due to the age in which we live, internationalizing labor costs has been a great deal more convenient. It is much easier for companies to either shift labor from one country to another, or for the company itself to go to the area of the world that provides the cheapest labor. This has occurred with increased rapidity and ease over the past two decades. Central bankers have also become more sophisticated in the balancing act between inflation and deflation. They are great technicians and are quite capable of interpreting events and striking a balance between these two horrors. This does not cancel out the basic flaw of a fiat currency; central bankers cannot replace the marketplace for determining interest rates and the proper amount of credit the economy needs. Central bankers have also had the advantage of technological changes that increase productivity and also serve to keep down certain prices. It is true that we live in an information age, an age in which travel is done with ease and communication improvements are astounding. All of these events allow for a bigger bubble and a higher standards of living. Unfortunately this will not prove to be as sustainable as many hope. the price of gold Another reason for the central bankers greater recent success is that they have been quite willing to cooperate with each other in propping up selected currency values and driving down others. They have cooperated vigorously in dumping or threatening to dump gold in order to keep the dollar price of gold in check. They are all very much aware that a soaring gold price would be a vote of no confidence for central- bank policy. Washington goes along because it is furtively, but definitely, acknowledged there that a free-market, high gold price would send a bad signal worldwide about the world financial system. Therefore, every effort is made to keep the price of gold low for as long as possible. It's true the supply-siders have some interest in gold, but they are not talking about a gold standard, merely a price rule that encourages central-bank fixing of the price of gold. Most defenders of the free- enterprise system in Washington are Keynesians at heart and will not challenge interventionism on principle. Instead of making sure that policy is correct, central bankers are much more interested in seeing that the gold-price message reflects confidence in the paper money. Thus gold has remained in the doldrums despite significant rising prices for silver, platinum, and palladium. However, be assured that even central banks cannot ``fix'' the price of gold forever. They tried this in the 1960's with the dumping of hundreds of millions of ounces of American gold in order to artificially prop up the dollar by keeping the gold price at $35/oz., but in August 1971 this effort was abandoned. the solution The solution to all of this is not complex. But no effort is going to be made to correct the problems that have allowed our financial bubble to develop, because Alan Greenspan has been practically declared a god by more than one Wall Street guru. Because Alan Greenspan himself understands Austrian free-market economics and the gold standard, it is stunning to see him participate in the bubble when he, deep down inside, knows big problems lurk around the corner. Without the motivation to do something, not much is likely to happen to our monetary system in the near future. It must be understood that politicians and the pressure of the special interests in Washington demand that the current policies of spending, deficits, artificially low interest rates and easy credit will not change. It took the complete demise of the Soviet-Communist system before change came there. But be forewarned: change came with a big economic bang not a whimper. Fortunately that event occurred without an armed revolution . . . so far. The amazingly sudden, economic events occurring in East Asia could still lead to some serious social and military disturbances in that region. The key element to the financial system under which we are now living is the dollar. If confidence is lost in the dollar and a subsequent free-market price for gold develops, the whole financial system is threatened. Next year, with the European currency unit (ECU) coming on line, there could be some serious adjustments for the dollar. The success of the ECU is unpredictable, but now that they are indicating some gold will be held in reserve, it is possible that this currency will get off the ground. nationalism However, I continue to have serious reservations regarding the ECU's long-term success, believing that the renewed nationalism within Europe will not permit the monetary unification of countries that have generally not trusted each other over the centuries. In Germany, 70 percent of the people oppose entering into this new monetary agreement. If economic problems worsen in Europe--currently the unemployment rate in Germany and France is 12 percent--the European union may well get blamed. The issue of nationalism is something that cannot be ignored. Immediately after the collapse in East Asia, Malaysia began shipping out hundreds of immigrants from Indonesia as a reaction to their economic problems. Resentment in Germany, France, and England is growing toward workers from other countries. The same sentiment exists here in the United States, but it's not quiet as bad at this particular time because our economy is doing better. But in the midst of a deep recession, the scapegoats will be found and alien workers will always be a target. The greatest danger in a collapsing financial bubble is that the economic disruptions that follow might lead to political turmoil. Once serious economic problems develop, willingness to sacrifice political liberty is more likely, and the need for a more militant government is too often accepted by the majority. No one has firmly assessed the Y2K problem, but it cannot bode well if a financial crisis comes near that time. Certainly a giant company like Citicorp and Travelers, who have recently merged, could really be hurt if the Y2K problem is real. Since the markets seem to be discounting this, I have yet to make up my own mind on how serious this problem is going to be. washington mentality Every politician I know in Washington is awestruck by Greenspan. The article in The New Republic reflects the way many Members of Congress feel about the ``success'' of Greenspan over the last ten years. Add to this the fact that there is no significant understanding of the Austrian business cycle in Washington, and the likelihood of adopting a solution to the pending crisis, based on such an understanding, is remote. Liberals are heedless of the significance of monetary policy and its ill effects on the poor. They have no idea that the transfer of wealth from the poor to the rich occurs as a result of monetary policy and serves to hurt the very people they claim to represent. Liberals stick to the old cliche that all that's needed are more welfare benefits. They are, I'm sure, influenced by the fact that if more welfare benefits are handed out, they can count on the Federal Reserve to accommodate them. Unfortunately this will continue to motivate them to argue for a loose monetary policy. The debate so often seems only to be who should get the expanded credit, the business-banking community or the welfare recipients who will receive it indirectly through the monetization of an ever- expanding government deficit. In Washington there is a craving for power and influence, and this motivates some a lot more than their public display of concern for helping the poor. Whether it's Japan that tries to inflate their currency to get out of an economic problem, or the East Asian countries facing their crisis, or our willingness to bail out the IMF, resorting to monetary inflation is the only option being considered. We can rest assured that inflation is here to stay. With daily pronouncements that inflation is dead, the stage is set for unlimited credit expansion whenever it becomes necessary. Just as deficit spending and massive budgets will continue, we can expect the falling value of the dollar, long term, to further undermine the economic and political stability of this country and the world. Until we accept the free market principle that governments cannot create money out of thin air and that money must represent something of real value, we can anticipate a lot more confiscation of wealth through inflation.

Mr. PAUL

Mr. PAUL. Mr. Speaker, I rise in strong objection to this motion. This should be a very easy vote for all of us; we should all vote no. They already have $35 billion of our money. They want $18 billion more. That is $53 billion. Think about it. Some of you would like to spend that on the military, on national defense. That would not be too bad an idea. Others might want to spend it on domestic welfare programs. This would be a better idea than bailing out rich bankers and foreign governments. Besides, there are some of us who would like to give the $53 billion back to the American people and lower their taxes. But to give them another $18 billion does not make any sense. Then to come to us and say it will not cost the taxpayers any money is absurd. Why do they come here and try to sneak through this appropriation with a parliamentary trick, if it is not going to cost the taxpayers any money? Certainly it is going to cost the taxpayers money. It adds to the national debt, and we have to pay interest on the national debt. This is a cost. Now, the Director of the IMF had an interesting proposal. He said this will not cost us anything because it is coming out of the Central Bank.

Mr. PAUL

Mr. PAUL. Mr. Speaker, I thank the gentleman from Texas (Mr. Barton) for yielding me this time, and I thank the gentleman for bringing this very important issue to the floor. Mr. Speaker, I would also like to compliment the gentlemen and ladies on the other side who have spoken out against this resolution, because I have to compliment them. They are brave to be able to come up here and speak their beliefs and really come out on the position of being for taxes. If I did something like that, I could not return to Texas. But I have to admire them for their willingness to come here and take a pro-tax position, so I think that is to be commended. Mr. Speaker, I would like to suggest to our side that if we all in the Congress did a better job in following the Constitution, we would not need this amendment. Because if we took our oath of office seriously, if we followed the doctrine of enumerated powers, if we knew the original intent of the Constitution, this government and this Congress would be very small and, therefore, we would not have to be worrying. The other contention we have and have to think about is if we do not already follow the Constitution in so many ways, why are we going to follow it next time? Nevertheless, this is a great debate. I am glad I am a cosponsor. I am glad it was brought to the floor. We do have to remember there is another half to taxation and that is the spending half. It is politically unpopular to talk about spending. It is politically very popular to talk about the taxes. So, yes, we are for lower taxes, but we also have to realize that the government is too big. They are consuming 50 percent of our revenues and our income today, and that is the problem. Government can pay for these bills in three different ways. One, they can tax us. One, they can borrow. And one, they can have the tax of inflation, which is indeed a tax. We are dealing here only with one single tax. But eventually, when we make a sincere effort to get this government under control, we will look at all three areas. We will limit the borrowing power. We will limit the ability of this Congress to inflate the currency to pay the bills. And we certainly will follow the rules of this House and this Constitution and not raise taxes.

Mr. PAUL

Mr. PAUL. Mr. Speaker, education in this country is facing a crisis. If we look at our schools carefully, we find out that there are a lot of drugs in our schools, actually murders occur in our schools, rape occurs in our schools, it is infested with teenage pregnancies. There is total disrespect for authority in many of our schools, and there is no good record to show that the academic progress is being made that is necessary. The President happens to believe that if we have national testing, this will solve all our problems. And now he is addressing these very, very serious problems that we have in our schools with saying that if we can only get these kids not to smoke a cigarette, maybe we are going to solve these educational problems. I would say that he is going in the wrong directions. These are serious problems and we must do something, but pretending that we are going to crack down on kids testing a cigarette, as bad as it is, is not going to solve our problems. I have a couple suggestions to make on what we can do to improve the educational system. I have a bill that I introduced recently. It is H.R. 3626. It is called the Agriculture Education Freedom Act. This is a bill I think everybody in this body could support. What it does, it takes away taxation on any youngster who makes some money at one of these 4-H or Future Farmers of America fairs. When they sell their livestock, believe it or not, we go and tax them. Just think of this. The kids are out there trying to do something for themselves, earn some money, save some money and go to school; and what do we do as a Congress, we pick on the kids, we go and we tax these kids. I talked to a youngster just this past weekend in the farm community in my district, and he told me he just sold an animal for $1,200 and he has to give $340 to the U.S. Government. Now, what are we doing, trying to destroy the incentive for these youngsters assuming some responsibility for themselves? Instead, what do we do? We say the only way a youngster could ever go to college is if we give them a grant, if we give them a scholarship, if we give them a student loan. And what is the record on payment on student loans? Not very good. A lot of them walk away. There is also the principle of it. Why should the Federal Government be involved in this educational process? And besides, the other question is, if we give scholarships and low-interest loans to people who go to college, what we are doing is making the people who do not get to go to college pay for that education, which to me does not seem fair. It seems like that the advantage goes to the individual who gets to go to college, and the people who do not get to go to college should not have to subsidize them. I think it is unfair it pick on these kids. I think it is time that we quit taxing any youngster who makes some money at a 4-H fair or Future Farmers of America fair where they are selling their livestock and trying to earn money to go to college. I think it is proper to say that they should have no taxation without representation. They are not even old enough to vote, and here we are taxing them. I mean that is not fair. So I am hoping that I get a lot of cosponsors for this bill, because there sure are a lot of youngsters around the country trying to assume responsibility for themselves. I do not believe for 1 minute the President's approach that we are going to assume that every kid is going to grow up to be a smoke fiend, and if we do not do something quickly, we are going to have them developing all these bad habits; at the same time, we see the deterioration of the public educational system. Also, I would like to mention very briefly another piece of legislation that would deal with this educational crisis. The Federal Government has been involved in our public schools for several decades. There is no evidence to show that, as we increase the funding and increase the bureaucracy, that there has been any improvement in education. Quite to the contrary, the exact opposite has happened. So I would say there is a very good practical case. I know the constitutional argument does not mean much. But the practical case is there is no evidence that what we have done so far has been helpful. I have another piece of legislation that would give $3,000 tax credit to every family for every child that they want to educate by themselves. So if they would spend any money on their child, whether they are in school or out of school, in private school, at home schooling, they would get this $3,000 credit. I hope my colleagues will take a look at these two pieces of legislation.

Mr. PAUL

Mr. PAUL. Madam Speaker, the House is about to implement rule changes that will require random drug testing of all House Members and staff. Drug usage in this country, both legal and illegal, is a major problem and deserves serious attention. However, the proposal to test randomly individuals as a method to cut down on drug usage is ill-advised and should not be done. The real issue here is not drugs but rather the issues of privacy, due process, probable cause and the fourth amendment. We are dealing with a constitutional issue of the utmost importance. It raises the question of whether or not we understand the overriding principle of the fourth amendment. A broader but related question is whether or not it is the government's role to mold behavior, any more than it is the government's role to mold, regulate, tax and impede voluntary economic contractual arrangements. No one advocates prior restraint to regulate journalistic expression, even though great harm has come over the century from the promotion of authoritarian ideas. Likewise, we do not advocate the regulation of political expression and religious beliefs, however bizarre and potentially harmful they may seem. Yet we casually assume it is the role of government to regulate personal behavior to make one act more responsibly. A large number of us in this Chamber do not call for the regulation or banning of guns because someone might use a gun in an illegal fashion. We argue that it is the criminal that needs regulated and refuse to call for diminishing the freedom of law-abiding citizens because some individual might commit a crime with a gun. Random drug testing is based on the same assumption made by anti-gun proponents. Unreasonable efforts at identifying the occasional and improbable drug user should not replace respect for our privacy. It is not worth it. While some Members are more interested in regulating economic transactions in order to make a fairer society, there are others here who are more anxious to regulate personal behavior to make a good society. But both cling to the failed notion that governments, politicians and bureaucrats know what is best for everyone. If we casually allow our persons to be searched, why is it less important that our conversations, our papers and our telephones not be monitored as well? Vital information regarding drugs might be obtained in this manner as well. Especially we who champion the cause of limited government ought not be the promoters of the roving eye of Big Brother. If we embark on this course to check randomly all congressional personnel for possible drug usage, it might be noted that the two most dangerous and destructive drugs in this country are alcohol and nicotine. To not include these in the efforts to do good is inconsistent, to say the least. Unfortunately, the administration is now pursuing an anti-tobacco policy that will be even less successful than the ill-fated Federal war on drugs. I have one question for my colleagues: If we have so little respect for our own privacy, our own liberty and our own innocence, how can we be expected to protect the liberties, the privacy and the innocence of our constituents, which we have sworn an oath to do? Those promoting these drug testing rules are well motivated, just as are those who promote economic welfare legislation. Members with good intentions attempting to solve social problems perversely use government power and inevitably hurt innocent people while rarely doing anything to prevent the anticipated destructive behavior of a few. It is said that if one has nothing to hide, why object to testing? Because, quite simply, we have something to keep: our freedom, our privacy and the fourth amendment. The only answer to solving problems like this is to encourage purely voluntary drug testing, whereby each individual and each Member of the House makes the information available to those who are worried about issues like this.

Mr. PAUL

Mr. PAUL. Mr. Speaker, since I was the first one in this Congress to step forward and introduce legislation affirming the NCUA's position allowing multiple common bonds for credit unions and signed on as a cosponsor of H.R. 1151 as originally written, I feel that I am in a disagreement among friends. I must oppose this bill because of the new regulations it imposes on credit unions and does nothing to address the legitimate concerns of the banks. While I strongly support the expansion of the field of membership for credit unions, the new regulations imposed upon them demonstrate a decision to follow the wrong path to ``level the playing field'' with banks and other financial institutions. A better approach would have been to lead the congress towards less taxes and less regulation. H.R. 1151, The Credit Union Membership Access Act, as amended by the committee, follows a path of more regulations and leads toward higher taxes on credit unions while the Financial Freedom Act, H.R. 1121, which I introduced a year ago, lowers taxes and regulations on banks. While H.R. 1151 does not impose new, direct taxes on credit unions, I fear that that day is just around the corner. The NCUSIF was the only deposit insurance fund started without any federal seed money and the credit unions never came to Washington for a taxpayer-funded bailout. In fact, allowing multiple common bonds for credit unions enhanced their safety and soundness. This bill will add new ``safety and soundness'' and CRA-like regulations on credit unions. These regulations will add a burdensome regulatory cost. This cost will be passed on to the consumer in the form of higher fees, higher interest rates and less service. It is the marginal consumer who will lose the most when this bill becomes law. The estimated, aggregate cost of bank regulation (noninterest expenses) on commercial banks was $125.9 billion in 1991, according to The Cost of Bank Regulation: A Review of the Evidence, Board of Governors of the Federal Reserve System (Staff Study 171 by Gregory Elliehausen, April 1998). It reports that studies estimate that this figure amounts to 12 percent to 13 percent of noninterest expenses. These estimates only include a fraction of the ``most burdensome'' regulations that govern the industry, it adds, ``The total cost of all regulations can only be larger.'' These regulations, under which the credit unions will now suffer a greater burden with the passage of this bill, impose a disproportionate burden on smaller institutions. These increased, and unfairly imposed, regulations will stifle the possibility of new entrants into the financial sector and contribute to a consolidation and fewer market participants of the industry. As the introduction of new entrants into the market becomes more costly, smaller institutions will face a marginally increased burden and will be more likely to consolidate. ``The basic conclusion is similar for all of the studies of economies of scale: Average compliance costs for regulations are substantially greater for banks at low levels of output than for banks at moderate or high levels of output,'' the Staff Study concludes. Smaller banks face the highest compliance cost in relation to total assets, equity capital and net income before taxes, reveals Regulatory Burden: The Cost to Community Banks, a study prepared for the Independent Bankers Association of America by Grant Thornton, January 1993. CRA compliance costs for small banks was $1 billion and 14.4 million employee hours in 1991. For each $1 million in assets, banks under $30 million in assets incur almost three times the compliance cost of banks between $30-65 million in assets. This regulation almost quadruples costs on smaller institutions to almost four times when compared to banks over $65 million in assets. These findings are consistent for both equity capital and net income measurements, according to the report. The IBAA study identifies the Community Reinvestment Act as the most burdensome regulation with the estimated cost of complying with CRA exceeding the next most burdensome regulation by approximately $448 million or 77%. Respondents to the IBAA study rated the CRA as the least beneficial and useful of the thirteen regulatory areas surveyed. In short, this bill takes the most costly and least beneficial and useful regulation on banks and adds a similar, new regulation on credit unions. Reducing the most costly, and least beneficial and useful regulation on the banks would have been a better approach. In addition to all of the problems associated with the obligations and requirements that the government regulations impose on the productive, private sectors of the economy, the regulations amount to a government credit allocation scheme. As Ludwig von Mises explained well in the Theory of Money and Credit in 1912, governmental credit allocation is a misdirection of credit which leads to malinvestment and contributes to an artificial boom and bust cycle. Nobel laureate Frederick A. Hayek and Murray Rothbard expounded on this idea. The unintended consequences of the passage of this bill, as written, will be to stifle the formation on new credit unions, consolidate current credit unions into larger ones better able to internalize the cost of the additional regulations, and lower productivity and economic growth due to the misallocation of credit. This increased burden must ultimately be passed on to the consumer. The increased costs on credit unions this bill imposes will lead to a reduction of access to credit unions, higher fees and higher rates. These provisions are anti- consumer. The marginal consumers, those who currently can only receive a loan from a credit union without the burden of CRA, are the ones who will suffer under the provision of this bill. I hope that the bill can be improved as the process continues and lead to less regulations and other taxes on banks rather than more regulations and other taxes on credit unions.

Mr. PAUL. Mr. Speaker, I thank the chairman for yielding me the time. I am an original cosponsor of 1151. But the original bill never came to the committee. It was quickly substituted with another bill, which I think is seriously weakened from the original bill that we had. So I would like to let all those 207 Members who are cosponsors that are not voting on the bill that they signed their name onto know that there are two major changes that have occurred. One is that the multiple common-bond position of 1151 has been removed. Now it is restrictive. And the other thing is there has been a lot of regulations added, and I think that we should consider long-term economic consequences and political consequences of opening up the door to regulations and also what it means down the road as far as insurance goes. For instance, it was bragged upon, the bill was bragged upon because the regulations of safety and soundness was good. We have had a lot of regulation, for safety and soundness for banks and savings and loan, and yet the FDIC and FSLIC had to be bailed out. The insurance deposit for credit unions was started by private money, no government subsidies, and has never been bailed out. So now we are going to overlook the credit unions and make sure they are safer and sound. I think it is the wrong direction that we are going. I think the whole notion that we are going to have the Community Reinvestment Act applied to the credit unions is going in the wrong direction. This is a form of credit allocation and, actually, long term, will weaken the credit unions. I would like to speak up for the credit unions and say this bill has been weakened to such a degree that they have opened up the doors, and down the road they are going to be treated like the banks, and down the road they will probably receive the taxation that banks have. I resent the idea that the competitors and the small banks, who do not like the competition of the credit unions, they say, well, let us tax them and regulate them. So, in a way, we have accommodated the banks by adding the regulations onto the credit unions. I do not think this is going in the right direction, and we should seriously consider a no vote on this legislation.

Mr. PAUL

Mr. PAUL. Mr. Chairman, I thank the gentleman for yielding this time to me. I rise in strong support of this amendment. I would like to remind my colleagues that in the 1950s when the Federal highway program started it was recognized that it was an improper function of the Federal Government. Therefore the Congress back then, they were still recognizing that the Constitution had some effect as well as the President; they had to come up for a reason for the highway projects, so they did it under national defense. Of course today we do not debate that issue in that light, but I think we see the results of doing something that was not proper. Today it is very expensive, it is very bureaucratic, and we have seen tonight in the debate how it has become politicized. So if we are looking for a fair way to build highways, a more efficient way to build highways, I think this is the answer. This is not going backwards, this is going forward. This would be the first time we could have a national highway system really controlled by the States where it is supposed to be. The States would have more money, not less money. They would have less regulation, not more regulation. This is much better than block grants. This is returning responsibility to the States. I compliment the gentleman for bringing this to the floor.