Jim Saxton

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I yield myself 10 seconds. Mr. Chairman, I ask the gentleman from American Samoa if he knows that Greenpeace, the World Wildlife Fund, the Center for Marine Conservation, the National Wildlife Federation, and the Environmental Defense Fund all strongly support the bill. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from California [Mr. Cunningham].

Mr. SAXTON. Mr. Chairman, I yield 1 minute to the gentleman from Colorado [Mr. Skaggs].

Mr. SAXTON. Mr. Chairman, I yield myself 30 seconds. I would like to say to the gentleman from Florida that we were also concerned about this issue, and we found after months of study no evidence that there is any delayed mortality from animals encircled and harvested in nets. No evidence at all, none, zero, zilch, nada. And so in spite of that, we are authorizing $1 million to study this very issue because we remain concerned about it. But the fact is, there is no evidence. Mr. Chairman, I yield 2 minutes and 30 seconds to the gentleman from San Diego, CA [Mr. Bilbray]. (Mr. BILBRAY asked and was given permission to revise and extend his remarks.)

Mr. SAXTON. Mr. Chairman, I yield 1 minute to the gentleman from Arizona [Mr. Kolbe], who knows as well as I do that this legislation does not allow foreign fishermen to land in the United States, and therefore there is no increased possibility of drug traffic.

Mr. SAXTON. Mr. Chairman, I yield myself 1 minute. I would just like to quickly quote from a letter that I have from the Office of the National Drug Control Policy, Bill McCaffrey. He said, this legislation is likely to aid in the fight against drug smuggling by increasing the level of scrutiny over the activities of vessels involved in this fishery. I also have a letter from Barbara Larkin of the United States State Department who says, the administration believes that the passage of this legislation would actually aid in the fight against drug smuggling by increasing the level of scrutiny over these vessels. This administration believes that we are headed in the right direction on an issue that is obviously a red herring brought up by the opponents of the bill. Mr. Chairman, I submit for the Record the material referred to. U.S. Department of State, Washington, DC, May 19, 1997. Hon. Don Young, Chairman, Committee on Resources, House of Representatives. Dear Mr. Chairman: This letter is to respond to your committee's request for answers to questions concerning H.R. 408, specifically allegations that purse seine vessels engaged in tuna harvesting in the eastern tropical Pacific Ocean are involved in drug trafficking. The Department of State has been working with the United States Coast Guard, the Office of Naval Intelligence, the Drug Enforcement Administration, and the Office of National Drug Control Policy to examine this question. Of the over one hundred fishing vessels participating in the International Dolphin Conservation Program (IDCP), only a few have in the past been linked to suspect activities or persons, and a recent review of available information elicited no hard evidence to confirm the allegation that vessels in the IDCP are involved in organized drug trafficking activities. As a general matter, the Magnuson-Stevens Fishery Conservation and Management Act prohibits foreign-flag vessels from conducting fishing operations within the U.S. Exclusive Economic Zone (``EEZ'') unless there is a governing international fisheries agreement (``GIFA'') in force between the United States and the flag state of the vessel. No GIFAs are in force for any of the nations participating in the purse seine tuna fishery in the eastern tropical Pacific Ocean. Even if such GIFAs were in force, foreign fishing within the U.S. EEZ could occur only if a surplus of fish was determined to exist and if the Secretary of State allocated a portion of that surplus to vessels of the flag State. In fact, there has been no such surplus identified for several years. Nothing in H.R. 408 would alter that circumstance. Transshipments involving foreign vessels in the EEZ are not allowed unless a GIFA is in force, or unless a permit is issued under section 204(d) of the Magnuson-Stevens Act (as amended by section 105(d) of the Sustainable Fisheries Act). No transshipment permits have been issued under section 204(d), nor have any applications been received from vessels in the IATTC La Jolla program. In order to issue a permit under section 204(d), the Secretary of Commerce must determine that the transportation of fish or fish products will be in the interest of the United States. Similarly, the Nicholson Act generally prohibits foreign- flag vessels from landing fish in U.S. ports. While there are a small number of limited exceptions to this rule (e.g., for the U.S. Virgin Islands and American Samoa), none of those exceptions applies to the tuna fishery of the eastern tropical Pacific Ocean. Accordingly, the foreign-flag vessels that participate in that fishery cannot land their catch in U.S. ports. Nothing in H.R. 408 would alter that circumstance either. Moreover, the Administration believes that the passage of this legislation would actually aid the fight against drug smuggling by increasing the level of scrutiny over the activities of vessels involved in the eastern tropical Pacific tuna fishery. There will be an observer on every vessel participating in the dolphin protection program, and the observer will be tracking the tuna from the net to the hold to the dock. This increase in oversight of vessels which could be used for smuggling will decrease the likelihood of their being used as part of the drug trade. The enactment of H.R. 408/S. 39, although obviously not designed as a counterdrug measure, will accomplish these things, and would also enhance the general level of cooperation among nations in the region, which could benefit the fight against drug smuggling. The Office of Management and Budget advises that from the standpoint of the Administration's program there is no objection to the submission of this report. I hope this information is useful to you. Please do not hesitate to call if we can be of further assistance. Sincerely, Barbara Larkin, Assistant Secretary, Legislative Affairs.

Mr. SAXTON. Mr. Chairman, I yield 1 minute to the gentleman from San Diego, CA [Mr. Bilbray]. (Mr. BILBRAY asked and was given permission to revise and extend his remarks.)

Mr. SAXTON. Mr. Chairman, I yield 2 minutes to the gentleman from Alaska [Mr. Young], who I do not think believes that we are a rubber stamp for the State Department. (Mr. YOUNG of Alaska asked and was given permission to revise and extend his remarks.)

Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume. I rise in support of H.R. 408, officially called the International Dolphin Conservation Program Act. This, Mr. Chairman, is essentially an ocean habitat management act to protect ocean species in the eastern tropical Pacific, including not just dolphins, but tuna fish as well, particularly juvenile tuna, sea turtles, bill fish, sharks and other species. This bill has been worked on for the last 3 years by the gentleman from Alaska [Mr. Young], our committee chairman, and by the gentleman from Maryland [Mr. Gilchrest], and by the gentleman from California [Mr. Cunningham], and by others on the committee. This is an international declaration, the Declaration of Panama, a binding international agreement signed by 12 nations on October 4, 1995. The nations are Belize, Colombia, Costa Rica, Ecuador, France, Honduras, Mexico, Panama, Spain, Vanuatu, Venezuela, and of course the United States. The United States was ably represented by our State Department, and these issues are, of course, of great importance to the American people as well as to the international community. During the 104th Congress, a nearly identical measure was passed by the House overwhelmingly with a 316 to 108 vote. But the Senate had insignificant time to consider the measure before the sine die adjournment. This year's measure, H.R. 408, amends the Mammal Protection Act to encourage fishing methods which protect dolphins and the other important species of marine life which I mentioned. The bipartisan bill has the support of the administration and various environmental groups, including Greenpeace, the World Wildlife Fund, the Center for Marine Conservation, the National Wildlife Federation, and the Environmental Defense League. Mr. Chairman, I would just like to say that the history of this bill is very, very important. In 1992, we passed a bill to protect dolphins in the eastern tropical Pacific. That bill worked with American fishermen. It worked because of the mechanism that was set up, but it did not work, Mr. Chairman, in the international community because an American law has little force and effect on foreign fishermen, particularly foreign fishermen that found other markets and continued to fish on dolphins or tuna fish and market them elsewhere. So I congratulate the Committee on Resources for this bill. I hope that everyone will vote for it. It is good legislation and our distinguished colleague, its author, the gentleman from Maryland [Mr. Gilchrest] should be congratulated for his hard work, as well as the gentleman from California [Mr. Cunningham], for initially bringing this matter to our attention more than 3 years ago. This is a true marine ecosystem protection bill and worthy of Members' support. I urge all Members to vote in favor. Mr. Chairman, I reserve the balance of my time.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, may I just ask a point of parliamentary inquiry?

Mr. SAXTON. Mr. Chairman, I yield myself the balance of my time to talk about a couple of aspects of this budget which I think are extremely important. One of the things that we try to do to encourage economic growth is to encourage what we refer to as capital formation. In other words, we encourage Americans to save and invest. One of the ways to do that is to reduce the burden imposed by the capital gains tax. Now, there are a couple of ways to do that. Obviously, we congratulate the chairman of the Committee on the Budget for his foresight in proposing to reduce the rate of taxation on capital gains. But there is another reason. That reason is that capital gains today can accurately be referred to as a tax on inflation. Let me explain. This chart depicts capital gains realizations from investments that may have been purchased in 1955 all the way through 1994. The red and green lines together represent the entire amount upon which capital gains is paid. The green lines represent that part of the gain that is due strictly to inflation. That is why we need to index capital gains taxes. In other words, if we paid taxes, capital gains taxes, on that part represented by the red bars, we can see how much less of a saver's and an investor's money would be taken away from them than if we do not index capital gains. It seems quite ludicrous to me to try to encourage young people, middle class people, investors to invest in those assets which will increase in value, upon which they will have to pay capital gains, if we tax inflation. So I commend the chairman for his foresight in bringing about that change or proposing to bring about that change. Let me also talk about deficit reduction and economic growth. Let me point out quickly that between fiscal years 1992 and 1997 the deficit has fallen by a wonderful $290 billion, I mean it is wonderful that it fell that much, to an estimated amount of less than $70 billion in the upcoming year. Part of these savings are the result of spending restraint by the Congress in 1995 and 1996, for which Congress should be commended, but by far, by far, the most important factor is the cyclical business expansion that began in 1991. That expansion continues today and shows no signs of slowing down. Unemployment is now below 5 percent. That is great, and I think that we should learn from what we have begun in terms of encouraging economic growth. The lesson to be learned here is that when the economy is healthy and people are working, the government naturally takes in more revenue and it makes our budgeteers' job just that much easier. Indeed, a strong economic growth represents the most pain-free path to a balanced budget. This fact alone should serve as a reminder that it is our number one deficit reduction tool that we have to make use of. In closing, Mr. Chairman, I want to urge my colleagues to keep in mind the role the economy plays in deficit reduction. The job of balancing the budget is made immensely easier when we have economic growth. The issues that we have talked about today, a recognition of the role of the Fed, a recognition that tax policy tends to increase or decrease economic growth, a recognition that when government expands to a size of more than 17 percent of GDP, and a recognition of the role of taxes and the tax on inflation imposed in our current system's capital gains, are all issues that have an important part to play in deficit reduction and in economic growth. So I will close, Mr. Chairman, by commending the gentleman from Ohio, [Mr. Kasich], and the other members of the Committee on the Budget and the negotiators who took part in these negotiations with the administration for the very fine document they have brought us, and I look forward to taking part in further discussions relative to these measures as we implement them in the appropriations process.

Mr. SAXTON. Mr. Chairman, may I inquire as to how much time is remaining?

Mr. SAXTON. Mr. Chairman, I yield 3 minutes to the gentleman from Iowa [Mr. Latham].

Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, let me take this opportunity to address a point which I think is very, very important, and that is the matter involving the consumer price index and the fact that it is not contained in the Committee on the Budget's proposal that we will vote on later tonight. It is true that a recent commission known as the Boskin commission reported that the CPI overestimates inflation by better than 1 percentage point. While that is true, I would like to say to all of the gentlemen and gentlewoman who are here in this Chamber that neither they nor I have the ability, objective as we might try to be, to arrive at an accurate figure through the legislative process. It is extremely difficult to be accurate with regard to the CPI, and inasmuch as family taxes to a large degree are impacted by CPI adjustments, and on the other hand, Social Security benefits are impacted by CPI adjustments, it seems to me that those people who have the expertise to bring together the facts about our economy that relate to price stability and increases or decreases in inflation, should be the people to make those judgments. Therefore, I worked extremely hard over the last month or 6 weeks to convey to the members of the Committee on the Budget and the leadership on both sides of the aisle how difficult it is to arrive at this CPI in any accurate measure. As a matter of fact, as long ago as 1928, a very famous economist by the name of Ludwig Vaughn Mises, who may be familiar to some of my colleagues, was a very important guy back in the 1920's, when he predicted the collapse of the Soviet Union as an economy. He did that because he had great insight. One of the minor things that he did, which today is rather important, is that he predicted and said that it would always be extremely difficult, if not impossible, to arrive at a truly accurate measure of price stability. That is true, and that is why this House, in my humble opinion and why I have worked so hard for the last 6 weeks to avoid that measure being adjusted in this budget document, that is why it is extremely difficult to arrive at an accurate measure. So I wanted to be sure that everyone who is here who will be voting tonight understands that CPI is simply not part of this budget, and that is why. Let me turn to another part of the subject here and talk a little bit about why I think this is a good budget. Another reason that I think we should all vote for this budget is that it obviously, over time, provides that our government will consume a smaller and smaller part of our gross domestic product. Now, this is extremely important because, if government consumes more and more of GDP, government becomes less and less efficient. And as government becomes less and less efficient, operating with more and more of the money in our economy, it tends to dampen economic growth. We did several major studies of this. If I may just refer to this little chart, this, I must admit, is a rather strange looking chart, but it tells a great story. The great story that it tells is that as the economy grows and consumes a larger and larger part of GDP, this is how the economy grows. As the economy grows, and it reaches an optimum point of producing economic activity, my colleagues have all heard, we have all heard the suggestion that the economy can be stimulated by government. Well, that is true, to a certain point. We believe that through our studies on the Joint Economic Committee that, once we reach about 17 percent, that we have maxed out the effect on the economy of government spending. And once we move beyond 17 percent into all of the other kinds of activities that government involves itself in as it gets large, we get a dampening effect on the economy. So we get good growth during the time that we spend the first 17 percent of GDP; and today, I say to my colleagues, Mr. Chairman, we are at 21 percent of GDP, expenditures through the Federal Government. Now, this has all kinds of consequences. It means bigger government, it means more regulation. The gentleman from Texas [Mr. Barton], who has fought so hard to reform the regulatory process, is here with us. And all of those activities have negative effects which we all want to avoid. So congratulations to the budgeteers who have recognized that, as spending increases and government gets bigger, it represents a more difficult time for our economy to expand. Let me just show one or two other examples. This is something that our Speaker, who just entered the room, spoke about not long ago in a press conference which I saw on C-Span. It is something called Tax Freedom Day. The size of government has a direct effect on this. Today Tax Freedom Day is the latest it has ever been. Americans pay taxes to support some level of government until May 9. Imagine that, January, February, March, April, and 9 days in May that we send money to Washington, our government, our State Capitol, and our local government to support government activities. That is a direct result of growing government. Again, congratulations to the budgeteers, who have recognized this fact and have provided us with an opportunity here tonight to vote for a budget that reduces the growth in government, and will begin to shrink the period of time that we Americans have to work each year to support government. This year it is May 9. Hopefully next year it will be back toward May 1, and hopefully the year after that it will be back into April. That should be our goal. Mr. Chairman, I reserve the balance of my time.

Mr. SAXTON. Mr. Chairman, I yield myself 30 seconds. Mr. Chairman, I would just like to point out that the gentleman who just spoke who spoke on the Consumer Price Index adjustment was either speaking for himself or some other budget. The CPI adjustment is not mandated or contained in any way in the committee budget. Mr. Chairman, I yield 5 minutes to the gentleman from Texas [Mr. Thornberry].

Mr. SAXTON. Mr. Chairman, I yield myself 4 minutes. Mr. Chairman, first I would like to compliment the negotiators both from the House and from the administration for arriving at a bipartisan agreement that will bring the budget into balance by the year 2002. I think it is extremely important for the American taxpayer and I think it is equally important for the continued economic expansion that we have seen since the second quarter of 1991, making it an extremely long and productive period of time for the American worker, due in no small part to what has gone on here in this House and in the other House as well as in the administration for the last decade or more. Mr. Chairman, I would like to put this in perspective, however, in that the current business cycle expansion is entering, as I said, this long period of time, entering actually its seventh year. The upswing got under way in the second quarter of 1991 and has brought sustained economic and employment growth throughout that period of time. In the last two quarters, the rate of growth has picked up, pushing the unemployment rate down to 4.9 percent. The positive economic climate makes fiscal restraint more palatable and clearly facilitated the achievement of the balanced budget agreement. However, Mr. Chairman, while some in Washington would like to lay claim and take political credit for the business cycle expansion, the credit really belongs to the many millions of American workers and entrepreneurs and savers and investors whose activities made the economy grow. Fortunately, they were afforded that opportunity by our system, and the current business cycle expansion is the result. To the extent that Washington policy is relevant to this expansion, the Fed's; the Federal Reserve that is, anti-inflation policies have lowered interest rates, improved the operation of the economy and sustained the expansion. The Federal Reserve's decision today to refrain from raising interest rates is certainly a welcome decision which I wholeheartedly endorse. The only suggestion I would make is that if the Fed could explain its policy decisions more fully, now and in the future, so that people who are taking part in our free enterprise system can understand why decisions are made from time to time. In fact, today's decision was announced in two words; that is right, two words: No increase. One of the benefits that this expansion brings is an improvement in the budget situation. As the economy continues to grow, the Federal revenues increase while Federal spending is restrained. The surge of revenue supplied from the business cycle has sharply lowered budget deficits, and as I pointed out some time ago, it now appears that this revenue surge from economic growth will reduce the 1997 deficit to below $70 billion. Although the economy has performed well, improvement in the economy is still possible. The bias in our current tax system against savings and investment undermines economic growth. Reduction in capital gains tax rates and death taxes and expansion of individual retirement accounts will add to growth in the years ahead. I endorse each of those features. Once the budget agreement is implemented, Congress can turn its consideration to ways to limit the many counterproductive features of the current income tax system. Just to complete, let me finish this thought, that aggressive further expansion of IRA's should be high on our list of future tax improvements. Mr. Chairman, I reserve the balance of my time.

Mr. SAXTON. Mr. Chairman, I am not clear at this point on whether we will alternate time with the other side of the aisle or whether this is a straight half hour. I do not care one way or the other. I would just like a clarification.

Mr. SAXTON. Mr. Chairman, I yield 3 minutes to the gentlewoman from Texas, [Ms. Granger].

Mr. SAXTON. Mr. Chairman, I yield 1 minute to the gentleman from Ohio [Mr. Kasich], very fine chairman of the Committee on the Budget.

Mr. SAXTON. Mr. Chairman, I yield 3 minutes to the gentleman from Tennessee [Mr. Wamp]. (Mr. WAMP asked and was given permission to revise and extend his remarks.)

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that the Committee on the Budget may have until midnight Sunday, May 18, 1997, to file a privileged report to accompany a concurrent resolution on the budget.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I move that the House do now adjourn.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that when the House adjourns on Monday, May 19, 1997, it adjourn to meet at 10:30 a.m. on Tuesday, May 20, for morning hour debates.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I take this time to talk a little bit about this Nation's economy. I have had the privilege during this 2 years of serving in the House as the chairman of the Joint Economic Committee. The Joint Economic Committee, as all the Members know, is made up of both Members of this House as well as Members of the other house, and it is essentially our job to try and determine what it is that is happening right with the economy, and how the activities that take place from time to time in this House and in the other house and in the administration and in the Federal Reserve, what kind of influence, both positive and negative, those agencies have on our economy, on job growth, on wage levels and all of the other aspects of economic life in the United States. I might say that some of these issues are from time to time very difficult to deal with because they have to do with taxes, they have to do with spending, they have to do with interest rates, they have to do with regulations that the Federal Government through our bureaucratic departments promulgates from time to time, and we have learned through studies in the Joint Economic Committee and other places that these issues that we deal with in the U.S. Government have a very direct and sometimes dramatic effect, sometimes positively and sometimes negatively, on our economy and jobs and wage scales and other issues that have to do with job stability and price stability and all of those kinds of things. What I wanted to talk about today is one little aspect of what we do, not taxes today so much or not spending today so much or not regulation today so much, but something called monetary policy, which really has a very direct effect on every American family because it has to do with how much we pay for money, how high interest rates are and how those interest rates affect our ability to get along, to make a living, to keep a job, to provide for our families, and the Federal Reserve has a very direct role to play with regard to these issues. The point here that I want to get to today is that the Federal Reserve over the past couple of months has entered upon some new policies which may or may not have a direct, dramatic effect on our economy. But I wanted to share these thoughts with the Members today because, as I said, they may or may not, and I think it is important for us to recognize that in all likelihood they may and probably will. First let me say that I am not here to criticize the Fed for their past policies. The economy of our country has done very well. As a matter of fact, over the past number of years, as a matter of fact, since the second quarter of 1991, our economy has been getting better. Our economy has been growing through each quarter. We had a recession in 1990, in the first quarter of 1991, and then it started to grow. Some of us found that a little bit strange because, as those of my colleagues who know me know, I do not think that tax increases help the economy very much. As a matter of fact, I believe quite the opposite, that tax increases like the one that we had in 1990 and like the one that we had in 1993, work to dampen job growth and work to dampen wage increases. Those tax increases take money out of the private sector and give it to us here in Washington, and we spend it much less efficiently than it gets spent and used and invested and saved in the private sector. So I was a little bit surprised when I began to see economic growth take place in the early 1990's, because in 1990 we had a big tax increase and the biggest one ever in 1993, and I thought that would serve to dampen the economy and to slow growth. But very much to my surprise, something else happened, and that was that a good friend of ours by the name of Alan Greenspan, who is Chairman of the Federal Reserve, entered upon a program which provided for stable prices. We call that price stability. Inflation is another word that we sometimes use to describe price stability. Over the past several years, in the decade of the 1990's, price stability has come to mean a great deal to us. It is my job today partly to compliment and thank the Federal Reserve for the policies that they have carried out during the decade of the 1990's, which have in large part offset the negative aspects of the tax increases that we had early in the decade. So since the second quarter of 1991 the economy has been growing, there have been more jobs, the unemployment rate has been coming down, wages have been stable, one of our weaker points, wages have not gone up like we had hoped, but unemployment has gone down, the gross domestic product has gone up, and the economy has been good, until and including the first quarter of this year when the economy grew by over 4 percent, and that is really good. But aside from the fact that we had economic growth during this period of time, we have also had inflation which has been going down, and this was also something that I think was very desirable. This chart that I have which is labeled ``Inflation'' measures inflation, and we have charted it out through the use of a measure called the Consumer Price Index. This is actually the Consumer Price Index, it is called the core CPI, which means it is all of the prices of goods and services that we buy in this country except food and energy, and we took out food and energy because they provide for big shots up and big shots down, and so we took those items out. But this chart serves very well to show the fine job that Fed policy has done during this decade. We can see very clearly that beginning in 1990 when inflation was relatively high, almost 6 percent a year during some quarters, that it has come down dramatically. It is our belief on the majority side at least of the Joint Economic Committee, that this has been a direct result of Federal Reserve policy in terms of their ability to squeeze inflation out of our economy. This is very important, because this sets the background for perhaps a change in policy away from this very successful policy that we have had. Because, as my colleagues all know, during the last couple of months there has been more and more talk about the Fed increasing interest rates. We have had a growing economy because of low interest rates. We have had good price stability because the Fed has squeezed inflation out of the economy through their policies, and many of us would like to see this policy continue. But on March 25, for the first time in a long time, Chairman Greenspan and the other Governors of the Fed chose to enter upon the policy of increasing interest rates, and on March 25 we had a 25 basis point increase in interest rates. I have another chart here which also demonstrates inflation. It is a very parallel track. This is called the Gross Domestic Product deflator. It shows, again, that inflation is well under control and that we do not have to worry about inflation at least in the short term, and many of us think in the long term as well. So what the Fed has set out to do, they have been very successful in doing, and that is keeping a good level of lowering and lowering and lowering inflation until we have gotten to a very low level. And so we began to wonder what the reasons were that the Fed decided to increase interest rates, because the economy is good, inflation is low. Why would anyone want to change that mix? Obviously the Fed's primary objective is and should be to control inflation, as we all know, and so it became a big question that we began to search for the answer to. We also looked at inflation of commodities. These commodities are those materials that we use in production basically. That may be a slight oversimplification, but once again we can see that during the decade of the 1990's, while commodity prices rose in the middle of the decade, they have sharply dropped here at the end of the decade. And so once again we see no signs of inflation, nothing for us to be all that concerned about. Here again is another picture of commodity prices since 1990, early 1995, 1995, 1996, and 1997. Once again we can see that prices are dropping, and so while the economy is good, prices continue to go down. Mr. Speaker, it is interesting to point out here that obviously, if we are going to have increases in interest rates, it is going to be more difficult for the economy to continue to do well, and so we searched and searched to try to find out why the Fed might be contemplating on next Tuesday yet another interest rate. Here are some measures that we look at over the long term to try and determine where inflation is going to go. When people buy bonds, for example, this is the long-term bond interest rate on 30-year Treasury bonds, people who decide to buy bonds and hold them for a long time are obviously very concerned about what interest rates will be in the future, and the long-term bond interest rate, therefore, tends to go up and down depending on the demand for long-term bonds. These interest rates have been consistently low, and we see no sign here of increase in interest rates over the long term, and so we still have found no evidence of inflation anywhere in the economy. This is a chart that looks quite different, but it is also an indicator that there is no threat of increases in inflation over the long term. This shows the relative value of the United States dollar, the American dollar, against the German mark, and it is high, meaning that we can buy lots of goods from Germany with fewer dollars than we could otherwise. And so this again is an indicator that we do not see inflation any time in the near future. And finally, a very similar chart which compares the value of our dollar. I am sorry, I guess I have lost a chart, but in any event we have a chart that looks very similar with regard to the value of the United States dollar against the Japanese yen. So in all of these instances we saw no evidence that inflation is coming, and so through conversations with people who are familiar with the Federal Reserve we began to ask why is it that we would have increases in the interest rates? Why is it that the Fed is again contemplating on next Tuesday the possibility of yet another interest rate rise? And one of the answers that we got has to do with our industrial production, and means that as we have the capacity to produce goods in our country our industrial complex could some day get to 100-percent capacity. We do not usually operate; in fact, we never really get to 100-percent capacity, but sometimes we could operate at 60-percent capacity or 70-percent capacity, and obviously when the economy is good, as it is right now, we would operate at a higher capacity. And what the Fed suggested is that we are operating at a very high capacity relative to our ability to produce goods and services and that this could be inflationary because, as we reach toward full capacity, things get so good that inflation could take place. In other words, we cannot produce enough goods to meet the demand that we have and because of the law of supply and demand inflation takes place because there is too much demand for the few goods that we can produce. And so we put these lines on charts to see if there is a correlation between this capacity, which is called capacity utilization; that is a big word that economists use that frankly I had to learn a while back. But this blue line represents capacity, and we can see here that back in the late 1980's our capacity was at a very high level, somewhere around 85 or 86, a full percent of full capacity, and we are about back at that level again currently. Now what happened when we were at full capacity back in the late 1980's was that we saw that we had moderate inflation. But today, being at about 85- or 86-percent capacity, the red line, which represents inflation, has gone down, and so the demand for goods and the ability to produce goods has not had a direct influence on inflation, and so when we looked at this and found that the Fed was worried about us producing at a very high capacity and that that might be causing inflation, we said we do not think this is the answer either. And so it leaves one to conclude that the members of the Fed who are concerned about inflation are concerned that because the economy is doing good, that that somehow translates into a coming period of inflation, and frankly we just do not see the evidence to support that notion. We believe that all of the indicators that I showed my colleagues; we believe that the ability to look at long-term bond rates, for example, and see that they are headed even lower, the ability to look at commodity prices and see that they continue to, as of today, go lower. The ability to look at the rate of inflation itself, which today continues at a very, very low level, does not indicate that we should have any worries about this economy overheating and, therefore, no thoughts or no thoughts which turn into action about raising interest rates which in turn will have the effect of slowing down the economy. Mr. Speaker, it is almost like saying we cannot have an economy that grows at 4 percent because, if we do, we will have inflation, and therefore we have to increase interest rates to slow down the economy so we will not have inflation, so we will increase interest rates, increase the level of unemployment, et cetera. We believe that what we should do is to enter upon a continuation of the policies that we have had since the early 1990's which have provided for a price stability, which has translated into lower interest rates, which lower interest rates have provided an incentive for the economy to grow and continue along the path toward prosperity after the turn of the century. I guess the other thing that is interesting to note here is that throughout the economic history of our country we have very seldom stayed on a growth line for a prolonged period of time. During the 1980's we had a very long period of growth that lasted from about 1983 to about 1990. When we got into a recession there was a 6 or 7-year period of growth, but then we had a major correction in our economy. We have now been in a period of sustained economic growth since the second quarter of 1991, and our fear is that if the Fed raises interest rates yet again on next Tuesday, that a new trend will have set in. After all, they raised interest rates on March 25, it is now May 20 on Tuesday, and if they raise interest rates again, a trend will have been set toward higher interest rates which cannot be good for a continued economic growth and the continuation of our economic expansion. Obviously, we think economic expansion is good for American families. Obviously, we think that is because wages have just recently begun to increase after this entire decade of stagnant wages. We think that ought to continue. We also think that families should have the opportunity to avail themselves to low interest rates so that they can buy homes and cars, and you know in a sense if the Fed increases interest rates, it is almost like us increasing taxes because it means families have less disposable income. And of course all of that acts to dampen the American economy. So, as you listen over this weekend to economic reports in anticipation of next Tuesday when the FOMC meets again, as you listen to different opinions, keep in mind that the charts and the data that I have shown you here this afternoon indicates that inflation is well in check, that the economy continues to grow at something above 4 percent, GDP continues to go up by something above 4 percent, that interest rates are relatively low at the moment and, we believe, ought to continue there, but most importantly the Federal Reserve's primary goal in my opinion and in the opinion, I believe, of most economists in this country should be to control inflation, and it is abundantly clear, at least to me, that we are in a period of controlled inflation, of price stability quite unlike most long periods of economic growth that we have seen in the past, and it is my hope and I think the hope of most Americans that we can continue to enjoy this period of economic prosperity and relatively low interest rates.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that when the House adjourns today, it adjourn to meet at 2 p.m. on Monday next.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that when the House adjourns on Tuesday, May 20, 1997, it adjourn to meet at 9 a.m. on Wednesday, May 21, for the purpose of receiving in this Chamber former Members of Congress.