Jim Saxton

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I rise tonight to announce to the House that over the last several days, together with my Joint Economic Committee staff, we have prepared five papers that demonstrate very well why all Members of the House should support this week the final element of the Contract With America. These are five papers which are very easy reading and I would just like to tell you what the five papers are and if you are interested in having a copy, you can call my office and obtain one. The first one is ``The Contract and Economic Growth.'' The first paper makes note that economic growth has been forecast by the Clinton administration over the coming years to grow at only about 2.3 to 2.5 percent. We point out in this that the economic policies that are contained in this week's tax package will promote the kind of growth that will get us back to where we need to be. You do not have to ask us, because this issue has been studied by others and many others from outside the Congress agree that that will happen. The second paper is ``The Contract Means More Personal Incomes for Families.'' As the economy grows and expands, everybody's share will be bigger, from low-income people to high-income people. As a matter of fact, by the year 2002, it is projected that our economy will be $1.1 trillion larger than it is today. The claims of supporters of the contract are realistic. Several studies, including those by DRI/McGraw-Hill, Laurence Meyers and Associates, and the Institute for Policy Innovation all agree. The third paper is ``The Contract and Take Home Pay.'' It is important to make note that the $500 per child tax credit helps those families that need it the most. For example, we point out in this paper that if you are a family with an income of $25,000, a family of four, that 100 percent of your tax, remaining tax liability will be alleviated by the $500 tax credit. If you are in the $30,000 tax bracket, 48 percent of your tax liability will be alleviated with the Contract With America. If you are in the $45,000 incomes category for a family of four, your tax liability will be reduced by 21.5 percent. And if you are in the whopping $50,000 category, your tax liability will be reduced by 17.8 percent. Very significant for today's families. We also point out in paper No. 4 entitled ``The Contract and Victory Over Government Day,'' for those of you who have not heard, Victory Over Government Day is the day when we finally get on our own to earn a living for our family and do not have to send any more money to the Government, this year Victory Over Government Day will be June 4. Under President Clinton's proposed budget by the year 2002, Victory Over Government Day will be 3 days later, on June 7. Under the provisions of the contract and the tax package we will pass this week, Victory Over Government Day will shrink back to May 26, a difference of 12 days that the American family can work for themselves instead of sending money to Government. Finally, the paper, the fifth paper, entitled ``The Contract and the Future,'' points out that the contract helps parents provide for their children's future and for their inheritance in four important ways. First, the contract improves take-home pay for families because with an expanding economy we can all expect to make more. Second, the contract provides for the super-IRA provision and, in so doing, allows increased savings. The contract allows the family to plan more efficiently for college or for retirement. Third, the contract helps families plan for their future by reducing the benefits tax on seniors who work. As we all know, in 1993 President Clinton and the Democrats increased the taxes on senior citizens' Social Security, and of course that is repealed. The fourth and final way the contract helps families provide is by reducing the estate tax and thereby reducing the taxes on inheritance. And, of course, that allows parents to pass more along to their children to help them in the outyears. So these are five papers that we have spent a lot of time researching, writing, putting together, verifying. They are important points I think that are made in these papers, and we will be more than happy to provide them to any Member who wishes to have them.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, the last speaker from the other side of the aisle seemed to take great delight in looking back at the 1980's and suggesting that what was done during the 1980's was all wrong because we created a big debt. Well, I agree with the gentleman that what we did was all wrong because we created a big debt. But it was not the tax side of the equation that we did wrong. It was the spending side of the equation that we did wrong. As a matter of fact, during the 1980's, if one looks back, during the first 3 years of the 1980's we had virtually no growth in revenues, no growth because we were suffering from the hangover of the Carter administration. I can remember during that period of time when President Carter could not figure out what had gone wrong, and there was a new person who came on the scene. His name was Ronald Reagan. There are some of us on this side of the aisle, and I hope some on that side, who recognize that there were some things that were done right during the early 1980's to help put our economy back on the right track. One of those things occurred in 1981, 1982, and 1983. It was a redoing of our tax policy because we recognized that we could not get growth in Federal revenues until we got the national economy growing. And it was in 1981, 1982, and 1983 that we put a whole new face on our Tax Code, a whole new face that was intended to create economic growth, create jobs and at the same time create more Federal revenue. And, guess what, at the beginning of the 1980's we had Federal revenues of just over $500 billion, and by 1990 we had doubled our revenues. That is right. In spite of the fact that in 1981, 1982, and 1983 we had tax rate reductions, by 1990 we had doubled the amount of revenue that our colleagues from both sides of the aisle had to spend. And so if anyone thinks that the Reagan tax policies had something bad to do with our revenue picture, bad to do with economic growth or bad to do with the deficit situation, I think they are dead wrong. As a matter of fact, what we did wrong in the 1980's was that while we were doubling the amount of revenue that we had to spend we more than doubled spending, and I think all of us recognize today therefore that there were some things that we did right in the 1980's that had to do with economic growth where we had, on average, better than 4 percent growth. What we did wrong was that we had, on average, more than that in terms of growth in our spending programs. And so what we are trying to do on this side of the aisle, now that for the first time in 40 years we get to call some of the shots, we are trying to replicate what we did right in the 1980s and fix what we did wrong. We got to the end of the 1980's and President Bush went off to Andrew air Force Base in I think it was 1989 or 1990; and he said, look, we have got to fix this situation. The Democrat leadership agreed, and they agreed to raise taxes to fix the deficit problem. with the Democrat leadership that once again we ought to do something to try to fix the deficit problem. In both cases taxes were raised; and in both cases, one succeeding the other, it was the biggest tax increase in the history of our country, in 1990 trumped by 1993. When we come and look at the books today we see that we have still got the same deficit problem because we have not done anything about spending, and by increasing taxes we have simply put a damper on the national economy. This year, the President's report on the economy suggests that in the years ahead we can anticipate a 2.3- to 2.5-percent growth in our national economy. And, once again, many of us think on this side of the aisle and I am sure there are some on yours who believe that this is because of the bad tax policy that was put in place in 1990 and 1993. What the Republican tax proposal for this year is, it is a growth package. It deals with capital gains to get growth. It deals with reforming the alternative minimum wage to get growth. It deals with promoting savings and investment by giving different treatment to the IRA's and putting in place what we call our super-IRA plan. It has to do with the senior citizens earning test, and it has to do with a family tax credit for middle America so that the families of America can share in this growth opportunity along with our Government and with our Federal revenues. So when the gentleman, the previous speaker from Illinois, Mr. Durbin, criticized us for the 1980's, we are willing to take our share of the criticism. We are willing to look at what we did wrong in the 1980's, which was our failure to curtail spending, but we are not willing to concede, not for a minute, that good growth tax policy is what the American economy needs, and as a result, we will have the revenue to balance the budget by the year 2002.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks, and include extraneous material on H.R. 622, as amended, the bill just passed.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of H.R. 622, noncontroversial legislation pending before us today. H.R. 622 is the implementation of the Convention on Future Multilateral Cooperation in the Northwest Atlantic Fisheries. This bill was introduced by the ranking minority member of the Fisheries, Wildlife and Oceans Subcommittee, Mr. Studds. H.R. 622 would authorize U.S. participation in the North Atlantic Fisheries Organization--also known as NAFO. The NAFO is an international body established by convention in 1978 to oversee certain fisheries existing beyond the 200-mile territorial seas of the United States, Canada, and Greenland in the northwest Atlantic. The United States participated in the negotiations and signed the original convention. While the other body consented to membership to NAFO in 1983, Congress never enacted implementing legislation to allow full participation in the organization. And while U.S. fishermen must abide by the NAFO treaty, these same fishermen are unable to formally participate in the process that results in the treaty. This legislation would allow just that. Once again, this is a noncontroversial bill and I ask for your support. Mr. Speaker, I reserve the balance of my time.

Mr. SAXTON. Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. SAXTON. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 622) to implement the Convention on Future Multilateral Cooperation in the Northwest Atlantic Fisheries, as amended.

Mr. SAXTON

Mr. SAXTON. Madam Speaker, I would like to talk for just a few minutes about the rate of increase that we have seen in Federal spending and what some of us would like to do to stop that from happening. Last summer House Republicans held a series of meetings and decided that someone had to step up to the plate and do something about this very serious fiscal problem. Without question, Madam Speaker, one of the most important issues we face today is our soaring national debt. I think both parties agree with that. Today it has reached epidemic proportions in that we have a national debt of almost $5 trillion, $4.8 trillion to be more exact. Think about the magnitude of it. We are not talking about millions or billions that we throw around here daily. We are talking about trillions, almost $5 trillion. I realize that it is difficult for most people to think in terms of trillions. it is for me. But look at it this way. Five trillion is a 5 with 12 zeroes behind it. Or look at it in terms of what $5 trillion means if we divide it equally among the American citizens. In those terms $5 trillion means $18,000 for every man, woman and child in the United States, and, unless we deal with this problem now, by the turn of the century the United States will spend more on interest on the national debt than we spend on the defense of our country. That is why Republicans, and I might say some Members of both parties, are offering a fresh approach. If we simply slow the growth in spending from what it has averaged over the last 10 years, 7.6 percent; that is right, 7.6 percent every year increase over the last 10 years, if we slow it to about 3 percent, we can balance the budget by the year 2002. Programs that have been growing by leaps and bounds must be reined in. Now if we are being honest with ourselves and with the American people, we and our critics must make it clear that the Republicans are simply limiting the rate of growth in a broad variety of programs. I say to my colleagues, Yes, if you were told otherwise, you're not being told the truth. For example, Republicans want to reduce the rate of increase in the school lunch program. This year we're spending about $4.5 billion on this program, and we're proposing a spending level of $4.7 billion for fiscal year 1996. Now if that sounds to you like an increase, you have got it right. My colleagues, only in Washington can an increase of $200 million be considered a cut, and that is what our opponents are claiming. Let us look next at the Child Nutrition Program. We are currently spending at a level of $3.47 billion. The American people need to know that Republicans want to slow the rate of growth in this program by proposing a 1996 spending level of $3.68 billion, another $200 million increase. It is an increase over present levels, but it is not the astronomical rate of increase that some of our colleagues on the other side of the aisle want. What I am saying is that we are not decimating or gutting these programs. We are slowing the rate of growth for them from an average of 7.6 percent to about 3 percent. Let us look at one more program. Let us go to veterans benefits as a final example where in 1995 we spent about $17.73 billion. The spending level for veterans benefits under our Republican program for 1996 is $17.78 billion, another increase this time of $50 million, but a reduction in the rate of growth. By doing this we are doing something different to bring spending under control. We are doing something different because we recognize that there are limits to taxes Americans should be expected to pay, and there are limits to the debt we should create. We need to get real. We need to be straight with the American people, particularly with those who are the beneficiaries of the worthy programs that we are talking about. Join with us in bringing about a realistic, long range spending plan that will provide the level of benefits needed but will not bankrupt our children and our grandchildren.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, some months ago, after having been through the election and after having campaigned to support the provisions of the Contract With America, I came to the realization that subsequent to the policies that have been prevalent during this administration that had to do with tax policy, and then with the Fed increasing interest rates along with that tax policy at the same time we had high taxes, that history would ultimately repeat itself, and that our economy could not sustain itself with relatively high taxes and with increasing interest rates. There would come a time when our economy would turn down and that things would not be as this administration and all of us would like them to be. Perhaps that is not far away. I take this special order this afternoon to just bring light to the fact that there are clouds on the horizon, and that we as Republicans and Democrats need to agree on a course of action to avoid what could be an economic downturn, serious economic downturn. I picked up the Wall Street Journal this morning, and as I turned through the pages and got to page 2, I found three articles that disturbed me. The headline on one was ``Consumers Held Down Spending During January.'' In reading that article, it simply said that consumers were hesitant to spend, as perhaps they has been at some previous times recently. I looked at another article that disturbed me along the same vein that said ``Retailers See Mildly Disappointing Sales for February Amid Slowing Economy.'' Of course, that headline speaks for itself. Everyone can understand why we would be disappointed to see that the economy, as this headline says, is slowing. But then I saw a headline that really disturbed me, because a very important part of the Contract With America, things that Republicans and some Democrats agree on that are part of the contract, is that we can do some things here in the House of Representatives that will help to avoid a slowdown in the economy. And this third article, which really disturbed me, has a headline which says, ``Rubin Questions the Economic Impact of Capital Gains Tax Cuts, Tax Reform.'' This is Secretary Rubin, President Clinton's Secretary of the Treasury, and, of course, he is a very important person when it comes to directing economic policy. And that part of this that disturbed me the most said that he is being reported to have said ``No significant tax reform is likely to emerge from Congress without substantial leadership from the Treasury, and Treasury's limited resources to design a tax reform scheme of its own.'' Now, we have laid out before the America people as Republicans in the Contract With America our ideas of how to do this, and I would just say to Secretary Rubin, please, if you do not agree with us, at least recognize that the economy is showing signs of slowing, and please recognize that we have had seven interest rate increases in the last year, and please recognize that we had the largest tax increase to date in 1990, surpassed only by another more immense tax increase in 1993, and that taxes are at relative high rates and interest rates are relatively high, and yet Secretary Rubin does not worry about out Tax Code inhibiting savings investment and economic growth. He apparently does not want us to make changes to put in place tax policy proven to promote economic growth and savings. Today our Tax Code and other Government policies promote dependence in my view on government and retard economic growth. Let me just point to a couple of examples. Last week the Joint Economic Committee held a hearing here on the minimum wage and whether or not it should be increased as President Clinton has suggested. One of the things that we pointed out in that, and I will conclude with this, as to how government policy can promote dependence, is that $1 out of every $4.25, which is the minimum wage, comes to the Federal Government in terms of taxes. If that is in fact the case, it simply makes more sense for people of remain unemployed or go on welfare. These are the kinds of policies that we need to address as Republicans and Democrats with Secretary Rubin's help.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I would like to tell you about a letter that was sent to me from Mr. Edward Satell. Ed is the president of Progressive Business Publications, a small company in Pennsylvania that publishes newsletters for business executives. The letter Ed sent to me was dated August 1993 and was addressed to Professors David Card and Alan Kruger of Princeton University, and interestingly associates of Secretary of Labor Reich. The letter was a response to a New York Times article which hailed Card and Kruger's studies on the minimum wage. And, I might add, these are the same studies conducted by the same professors that the Clinton administration has been glorifying in their efforts to push a higher minimum wage through this House. In the letter, Ed noted that the 6 branches of his company provide about 300 full-time summer jobs to college students in the greater Philadelphia area. He said he was thinking about setting up two offices in south Jersey, where my constituents live, but instead he decided to open a couple of more offices in Pennsylvania. You see, New Jersey had just increased their minimum wage and kept these jobs away from my constituents. I am going to read some excerpts from Ed's letter that demonstrate how a successful entrepreneur can expand his business and reward his workers without government intervention. He said, Our employees have income incentives in addition to the base salary. The result is the vast majority make substantially more than the minimum wage. But the minimum wage is important to us as it sets the base from which the incentives begin. We give three incentives, all of which work well: A. 25 cents per hour if the employee comes to work on time each day during a given week. With my workers this incentive influences the work ethic and helps productivity. B. 50 cents per hour [is added] if the employee works for ten weeks like they agree to do at the time they are hired. This cuts down on turnover and adds to productivity. C. Performance bonuses that can add an additional $6.50 per hour [think of it, a total of $11.50 per hour]. He goes on to say: ``If the minimum wage were higher, it would have to be offset by lower incentives or fewer workers or both.'' Madam Speaker, Ed has shown us exceptional creativity in increasing the productivity of your business by rewarding your best workers and helping them develop a strong regard for their work. I only wish that New Jersey's minimum wage hadn't inhibited our ability to attract these jobs to southern New Jersey. By the way, since Ed sent his letter to Professors Card and Kruger, not even 2 years ago, his business doubled its employment, from 300 to 600 employees. I guess I should add that I wish New Jersey's minimum wage hadn't inhibited Ed's jobs from coming into my State. Ed's experience supports the bulk of scholarly evidence. The losses in jobs incurred by an increase in the minimum wage are concentrated among young, and low-skilled workers. Ed also points out that Card and Kruger's study was with the fast- food industry, an industry that is ``a rather healthy, fundamental, and pervasive business.'' He adds, ``This distorts the picture. I don't think the results would be the same with businesses that are not as fundamental and are thus more optional.'' Business, ``like mine,'' he said. What is more amazing, Madam Speaker, is that Card and Kruger seem to acknowledge these facts. In a reply to Ed's letter, they admit that there are job losses which accompany minimum wage increases. Then they thanked him for sharing his real world experiences. Well, I'm no Princeton economist, but I do know that in business, there are nothing but real world experiences. It's pretty sad that these two Ivy League professors, trapped in the ivory tower, have completely lost touch with reality. They make no sense to me at all. They admit that job losses result from minimum wage increases, but then they turn around and insist that their narrow, error-laden studies about fast-food restaurants in New Jersey demonstrate that a minimum wage increase results in job gains. What's even Madam Speaker, with a national minimum wage increase, Ed Satell won't have the choice between New Jersey and Pennsylvania any more and many of his young workers will just be out of luck.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, for many years it has been a matter of conventional wisdom among economists that the minimum wage causes fewer jobs to exist than would be the case without it. This is simply a matter of price theory, taught in every economics textbook, requiring no elaborate analysis to justify. Were this not case, there would be no logical reason why the minimum wage could not be set at $10 or $400 per hour. Historically, defenders of the minimum wage have not disputed the disemployment effects of the minimum wage. Rather, they argued that there was a redistributive effect that left the working poor better off. In other words, the higher incomes of those with jobs offset the lower incomes of those without jobs, as a result of the minimum wage. Now, the Clinton administration is advancing the novel economic theory that modest increases in the minimum wage will have no impact whatsoever on employment. Some administration officials have even hinted that raising the minimum wage can raise employment. This proposition in based entirely on the work of three economists: David Card and Alan Krueger of Princeton, and Lawrence Katz of Harvard. Their studies of increases in the minimum wage in California, Texas, and New Jersey apparently found no loss of jobs among fast food restaurants that were surveyed before and after the increase. It is not yet clear how or why Card, Katz, and Krueger got the results that they did. It is clear, however, that their findings are directly contrary to virtually every empirical study ever done on the minimum wage. These studies were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10-percent increase in the minimum wage reduced teenage employment by 1 to 3 percent. The following survey of the academic research on the minimum wage is designed to give nonspecialists a sense of just how isolated the Card, Krueger, and Katz studies are. It will also indicate that the minimum wage has wide-ranging negative effects that go beyond unemployment. For example, higher minimum wages encourage employers to cut back on training, thus depriving low-wage workers of an important means of long-term advancement, in return for a small increase in current income. For many workers this is a very bad tradeoff, but one for which the law provides no alternative. Summary of Research on the Minimum Wage The minimum wage reduces employment Currie, Janet, and Fallick, Bruce. 1993. A Note on the New Minimum Wage Research. National Bureau of Economic Research Working Paper No. 4348 (April). Gallasch, H.F., Jr. 1975. Minimum Wages and the Farm Labor Market. Southern Economic Journal, vol. 41 (January): 480- 491. Gardner, Bruce. 1981. What Have Minimum Wages Done in Agriculture? In Rottenberg (1981a): 210-232. Peterson, John M. 1957. Employment Effects of Minimum Wages, 1938-50. Journal of Political Economy, vol. 65 (October): 412-430. Peterson, John M., and Stewart, Charles T., Jr. 1969. Employment Effects of Minimum Wage Rates. Washington: American Enterprise Institute. The minimum wage reduces employment and Real Federal Minimum Wages. Journal of Political Economy, vol. 81 (March/April): 435-441. Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981a. Effects of the Minimum Wage on Youth Employment and Unemployment. In Minimum Wage Study Commission (1981), vol. 5, pp. 1-26. Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981b. Time-Series Evidence of the Effect of the Minimum Wage on Teenage Employment and Unemployment. In Minimum Wage Study Commission (1981), vol. 5, pp. 103-127. Fleisher, Belton M. 1981. Minimum Wage Regulation in Retail Trade. Washington: American Enterprise Institute. Hammermesh, Daniel S. 1982. Minimum Wages and the Demand for Labor, Economic Inquiry, vol. 20 (July): 365-380. Meyer, Robert H., and Wise, David A, 1981. Discontinuous Distributions and Missing Persons: The Minimum Wage and Unemployed Youth. In Minimum Wage Study Commission (1981), vol. 5, pp. 175-201. Meyer, Robert H., and Wise, David A. 1983a. The Effects of the Minimum Wage on the Employment and Earnings of Youth. Journal of Labor Economics, vol. 1 (January): 66-100. Minimum Wage Study Commission. 1981. Report, 7 vols. Washington: U.S. Government Printing Office. Neumark, David, and Wascher, William. 1992. Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws. Industrial and Labor Relations Review, vol. 46 (October): 55-81. Ragan, James F., Jr. 1977. Minimum Wages and the Youth Labor Market. Review of Economics and Statistics, vol. 59 (May): 129-136. Vandenbrink, Donna C. 1987. The Minimum Wage: No Minor Matter for Teens. Economic Perspectives, Federal Reserve Bank of Chicago, vol. 11 (March/April): 19-28. Welch, Finis. 1974. Minimum Wage Legislation in the United States. Economic Inquiry, vol. 12 (September): 285-318. Welch, Finis. 1978. Minimum Wages: Issues and Evidence. Washington: American Enterprise Institute. Welch, Finis, and Cunningham, James. 1978. Effects of Minimum Wages on the Level and Age Composition of Youth Employment. Review of Economics and Statistics, vol. 60 (February): 140-145. the minimum wage reduces employment most among black teenage males Al-Salam, Nabeel; Quester, Aline; and Welch, Finis. 1981. Some Determinants of the Level and Racial Composition of Teenage Employment. In Rottenberg (1981a): 124-154. Iden, George. 1980. The Labor Force Experience of Black Youth: A Review. Monthly Labor Review, vol. 103 (August): 10- 16. Mincer, Jacob. 1976. Unemployment Effects of Minimum Wages. Journal of Political Economy, vol. 84 (August): S87-S104. Moore, Thomas G. 1971. The Effect of Minimum Wages on Teenage Unemployment Rates. Journal of Political Economy, vol. 79 (July/August): 897-902. Ragan, James F., Jr. 1977. Minimum Wages and the Youth Labor Market. Review of Economics and Statistics, vol. 59 (May): 129-136. Williams, Walter. 1977a. Government Sanctioned Restraints that Reduce Economic Opportunities for Minorities. Policy Review (Fall): 7-30. Williams, Walter. 1977b. Youth and Minority Unemployment. Study prepared for the Joint Economic Committee, U.S. Congress. Joint Committee Print, 95th Congress, 1st session. Washington: U.S. Government Printing Office. The minimum wage helped South African whites at the expense of blacks Bauer, P.T. 1959. Regulated Wages in Under-developed Countries. In The Public Stake in Union Power, ed. Philip D. Bradley. Charlottesville, VA: University of Virginia Press, 324-349. The minimum wage hurts blacks generally Behrman, Jere R.; Sickles, Robin C.; and Taubman, Paul. 1983. The Impact of Minimum Wages on the Distributions of Earnings for Major Race-Sex Groups: A Dynamic Analysis. American Economic Review, vol. 73 (September): 766-778. Linneman, Peter. 1982. The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question. Journal of Political Economy, vol. 90 (June): 443-469. The minimum wage hurts the unskilled Krumm, Ronald J. 1981. The Impact of the Minimum Wage on Regional Labor Markets. Washington: American Enterprise Institute. The minimum wage hurts low wage workers Brozen, Yale. 1962. Minimum Wage Rates and Household Workers. Journal of Law and Economics, vol. 5 (October): 103- 109. Cox, James C., and Oaxaca, Ronald L. 1982. The Political Economy of Minimum Wage Legislation. Economic Inquiry, vol. 20 (October): 533-555. Gordon, Kenneth. 1981. The Impact of Minimum Wages on Private Household Workers. In Rottenberg (1981a): 191-209. The minimum wage hurts low wage workers particularly during cyclical downturns Kosters, Marvin, and Welch, Finis. 1972. The Effects of Minimum Wages on the Distribution of Changes in Aggregate Employment. American Economic Review, vol. 62 (June): 323- 332. Welch, Finis. 1974. Minimum Wage Legislation in the United States. Economic Inquiry, vol. 12 (September): 285-318. the minimum wage increases job turnover Hall, Robert E. 1982. The Minimum Wage and Job Turnover in Markets for Young Workers. In The Youth Labor Market Problem: Its Nature, Causes, and Consequences, ed. Richard B. Freeman and David A. Wise, pp. 475-497. Chicago: University of Chicago Press. the minimum wage reduces average earnings of young workers Meyer, Robert H., and Wise, David A. 1983b. Discontinuous Distributions and Missing Persons: The Minimum Wage and Unemployed Youth. Econometrica, vol. 51 (November): 1677- 1698. The minimum wage drives workers into uncovered jobs, thus lowering wages in those sectors. Brozen, Yale. 1962. Minimum Wage Rates and Household Workers. Journal of Law and Economics, vol. 5 (October): 103- 109. Tauchen, George E. 1981. Some Evidence on Cross-Sector Effects of the Minimum Wage. Journal of Political Economy, vol. 89 (June): 529-547. Welch, Finis. 1974. Minimum Wage Legislation in the United States. Economic Inquiry, vol. 12 (September): 285-318. the minimum wage reduces employment in low-wage industries, such as retailing Cotterman, Robert F. 1981. The Effects of Federal Minimum Wages on the Industrial Distribution of Teenage Employment. In Rottenberg (1981a): 42-60. Minimum Wage in the United States. Economica, vol. 27 (May): 137-147. Fleisher, Belton M. 1981. Minimum Wage Regulation in Retail Trade. Washington: American Enterprise Institute. Hammermesh, Daniel S. 1981. Employment Demand, the Minimum Wage and Labor Costs. In Minimum Wage Study Commission (1981), vol. 5, pp. 27-84. Peterson, John M. 1981. Minimum Wages: Measures and Industry Effects. Washington: American Enterprise Institute. the minimum wage hurts small businesses generally. Kaun, David E. 1965. Minimum Wages, Factor Substitution and the Marginal Producer. Quarterly Journal of Economics, vol. 79 (August): 478-486. the minimum wage causes employers to cut back on training. Hashimoto, Masanori. 1981. Minimum Wages and On-the-Job Training. Washington: American Enterprise Institute. Hashimoto, Masanori. 1982. Minimum Wage Effects on Training on the Job. American Economic Review, vol. 72 (December): 1070-1087. Leighton, Linda, and Mincer, Jacob. 1981. The Effects of Minimum Wages on Human Capital Formation. In Rottenberg (1981a): 155-173. Ragan, James F., Jr., 1981. The Effect of a Legal Minimum Wage on the Pay and Employment of Teenage Students and Nonstudents. In Rottenberg (1981a): 11-41. the minimum wage has long-term effects on skills and lifetime earnings. Brozen, Yale. 1969. The Effect of Statutory Minimum Wage Increases on Teen-age Employment. Journal of Law and Economics, vol. 12 (April): 109-122. Feldstein, Martin. 1973. The Economics of the New Unemployment. The Public Interest (Fall): 14-15. the minimum wage leads employers to cut back on fringe benefits. McKenzie, Richard B. 1980. The Labor Market Effects of Minimum Wage Laws: A New Perspective. Journal of Labor Research, vol. 1 (Fall): 255-264. Wessels, Walter J. 1980. Minimum Wages, Fringe Benefits, and Working conditions. Washington: American Enterprise Institute. the minimum wage encourages employers to install labor-saving devices. Trapani, John M., and Moroney, J.R. 1981. The Impact of Federal Minimum Wage Laws on Employment of Seasonal cotton farm Workers. In Rottenberg (1981a): 233-246. the minimum wage hurts low-wage regions, such as the south and rural areas Colberg, Marshall R. 1960. Minimum Wage Effects on Florida's Economic Development. Journal of Law and Economics, vol. 3 (October): 106-117. Colberg, Marshall. 1981. Minimum Wages and the Distribution of Economic Activity. In Rottenberg (1981a): 247-263. Krumm, Ronald J. 1981. The Impact of the Minimum Wage on Regional Labor Markets. Washington: American Enterprise Institute. the minimum wage increases the number of people on welfare Brandon, Peter D. 1995. Jobs Taken by Mothers Moving from Welfare to Work and the Effects of Minimum Wages on this Transition. Washington: Employment Policies Institute Foundation. Leffler, Keith b. 1978. Minimum Wages, Welfare, and Wealth Transfers to the Poor. Journal of Law and Economics, vol. 21 (October): 345-358. the minimum wage hurts the poor generally Stigler, George J. 1946. The Economics of Minimum Wage Legislation. American Economic Review, vol. 36 (June): 358- 365. the minimum wage does little to reduce poverty Bonilla, Carlos E. 1992. Higher Wages, Greater Poverty. Washington: Employment Policies Institute. Brown, Charles, 1988. Minimum Wage Laws: Are They Overrated? Journal of Economic Perspectives, vol. 2 (Summer): 133-145. Johnson, William R., and Browning, Edgar K. 1983. The Distributional and Efficiency Effects of Increasing the Minimum Wage: A Simulation. American Economic Review, vol. 73 (March): 204-211. Kohen, Andrew I., and Gilroy, Curtis L. 1981. The Minimum Wage, Income Distribution, and Poverty. In Minimum Wage Study Commission (1981), vol. 7, pp. 1-30. Parsons, Donald, O. 1980. Poverty and the Minimum Wage. Washington: American Enterprise Institute. Smith, Ralph E., and Vavrichek, Bruce. 1987. The Minimum Wage: its Relation to Incomes and Poverty. Monthly Labor Review, vol. 110 (June): 24-30. The minimum wage helps upper income families Bell, Carolyn Shaw. 1981. Minimum Wages and Personal Income. In Rottenberg (1981a): 429-458. Datcher, Linda P., and Loury, Glenn C. 1981. The Effect of Minimum Wage Legislation on the Distribution of Family Earnings Among Blacks and Whites. In Minimum Wage Study Commission (1981), vol. 7, pp. 125-146. Johnson, William R., and Browning, Edgar K. 1981. Minimum Wages and the Distribution of Income. In Minimum Wage Study Commission (1981), vol. 7, pp. 31-58. Kohen, Andrew I., and Gilroy, Curtis L. 1981. The Minimum Wage, Income Distribution, and Poverty. In Minimum Wage Study Commission (1981), vol. 7, pp. 1-30. The minimum wage helps unions Linnerman, Peter. 1982. The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question. Journal of Political Economy, vol. 90 (June): 443-469. Cox, James C., and Oaxaca, Ronald L. 1982. The Political Economy of Minimum Wage Legislation. Economic Inquiry, vol. 20 (October): 533-555. The minimum wage lowers the capital stock McCulloch, J. Huston, 1981. Macroeconomic Implications of the Minimum Wage. In Rottenberg (1981a): 317-326. The minimum wage increases inflationary pressure Adams, F. Gerard. 1987. Increasing the Minimum Wage: The Macroeconomic Impacts. Briefing Paper, Economic Policy Institute (July). Brozen, Yale. 1966. Wage Rates, Minimum Wage Laws, and Unemployment. New Individualist Review, vol. 4 (Spring): 24- 33. Gramlich, Edward M. 1976. Impact of Minimum Wages on Other Wages, Employment, and Family Incomes. Brookings Papers on Economic Activity (No. 2): 409-461. Grossman, Jean B. 1983. The Impact of the Minimum Wage on Other Wages. Journal of Human Resources, vol. 18 (Summer): 359-378. the minimum wage increases teenage crime rates Hashimoto, Masanori. 1987. The Minimum Wage Law and Youth Crimes: Time-Series Evidence. Journal of Law and Economics, vol. 30 (October): 443-464. Phillips, Llad. 1981. Some Aspects of the Social Pathological Behavior Effects of Unemployment among Young People. In Rottenberg (1981a): 174-190. the minimum wage encourages employers to hire illegal aliens Beranek, William. 1982. The Illegal Alien Work Force, Demand for Unskilled Labor, and the Minimum Wage. Journal of Labor Research, vol. 3 (Winter): 89-99. few workers are permanently stuck at the minimum wage Brozen, Yale. 1969. The Effect of Statutory Minimum Wage Increases on Teen-age Employment. Journal of Law and Economics, vol. 12 (April): 109-122. Smith, Ralph E., and Vavrichek, Bruce, 1992. The Mobility of Minimum Wage Workers. Industrial and Labor Relations Review, vol. 46 (October): 82-88. the minimum wage has had a massive impact on unemployment in Puerto Rico Freeman, Alida Castillo, and Freeman, Richard B. 1991. Minimum Wages in Puerto Rico: Textbook Case of a Wage Floor? National Bureau of Economic Research Working Paper No. 3759 (June). Rottenberg, Simon. 1981b. Minimum Wages in Puerto Rico. In Rottenberg (1981a): 327-339. the minimum wage has reduced employment in foreign countries Forrest, David. 1982. Minimum Wages and Youth Unemployment: Will Britain Learn from Canada? Journal of Economic Affairs, vol. 2 (July): 247-250. Corbo, Vittorio. 1981. The Impact of Minimum Wages on Industrial Employment in Chile. In Rottenberg (1981a): 340- 356. Gregory, Peter. 1981. Legal Minimum Wages as an Instrument of Social Policy in Less Developed Countries, with Special Reference to Costa Rica. In Rottenberg (1981a): 377-402. Rosa, Jean-Jacques. 1981. The Effect of Minimum Wage Regulation in France. In Rottenberg (1981a): 357-376. characteristics of minimum wage workers. Employment Policies Institute. 1994. The Low-Wage Workforce. Washington: Employment Policies Institute. Haugen, Steven E., and Mellor, Earl F. 1990. Estimating the Number of Minimum Wage Workers. Monthly Labor Review, vol. 113 (January): 70-74. Kniesner, Thomas J. 1981. The Low-Wage Workers: Who Are They? In Rottenberg (1981a): 459-481. Mellor, Earl F. 1987. Workers at the Minimum Wage or Less: Who They Are and the Jobs They Hold. Monthly Labor Review, vol. 110 (July): 34-38. Mellor, Earl F., and Haugen, Steven E. 1986. Hourly Paid Workers: Who They Are and What They Earn. Monthly Labor Review, vol. 109 (February): 20-26. Smith, Ralph E., and Vavrichek, Bruce. 1987. The Minimum Wage: Its Relation to Incomes and Poverty. Monthly Labor Review, vol. 110 (June): 24-30. Van Giezen, Robert W. 1994. Occupational Wages in the Fast- Food Industry. Monthly Labor Review, vol. 117 (August): 24- 30. Vol. 141 WASHINGTON, THURSDAY, FEBRUARY 16, 1995 No. 31 House of Representatives

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I move to strike the requisite number of words. I just wanted to make a couple of remarks. I did not intend to speak on this amendment, but I, as I listened to the debate and noted that there was a great deal of concern about whether or not Members who are against this amendment and for developing and deploying, whether or not we care about other things, I think the fact of the matter is that we care a lot. The fact of the matter is we care a lot about our country. The fact of the matter is we care a lot about our national security, and that is all for the people we represent. If we did not care as a country during the 1950's, we would not have developed the technology and bought the hardware that led us to send in very rapid order, very quickly, 450,000 troops by air to the gulf. That technology today is almost worn out, C- 141's and C-5's. But that was developed in the 1950's, and we bought it and put it in place in the 1960's. If we did not care about this thing, we would not have developed the technology in the 1960's that resulted in the M1A1 tank that was used in the gulf which, believe it or not, Iraqi soldiers let us look through clouds of dust and look through clouds of fog and look through rains, rain storms and allowed us to fire on and hit enemy tanks, when they could not see us. If we did not care about these subjects, we would not have developed during the 1970's munitions that we saw used in the Gulf war that were so accurate that the old saying today, and today it is an old saying, it is kind of neat, those smart munitions went right down the chimneys of the Iraqi houses. If we did not care, we would not have developed those technologies. I want to make a point. The point is this, that if we do not get serious about this issue, based on what I know about development of weapons systems and development of technology, we are I do not want to find ourselves there. Mr. Chairman, again, and I do not want to overuse this statement, but today the Director of the CIA says that this threat is imminent; that by the turn of the century we are going to have to be concerned about this issue from unfriendly countries in far off parts of the world, not the old Soviet Union, but other people. It was neat when we had the Soviet Union. They were rational folks and we could sit and talk with them. They understood that they had a gun pointed at us and we had a gun pointed at them, and they cared about that issue, so deterrence worked. I wanted to ask the gentleman, does he think deterrence will work the same way with countries in the Middle East that are trying very desperately to gain this technology? Will it work with the Koreans? I do not want to bet on it, Mr. Chairman. I would rather develop and buy this technology that works, when it works, and that is what our position on this side of the aisle is all about. Mr. Chairman, finally, one point: Secretary of Defense Perry just last week or the week before came to the Committee on National Security and said, ``Please do not micromanage my programs.'' The amendment just recently passed speaks to a ground-based missile defense system. We have made the judgment that that is the way we want to go. This amendment goes further and says, ``Don't buy space-based.'' I do not feel like I am in a position to make those decisions, and Secretary Perry just last week said, ``Please don't make those decisions for us,'' so I think this is an ill-advised amendment.

Mr. SAXTON. Earlier obviously some people were not here, but there was a discussion about whether or not there was a threat and what the gentleman points out with regard to submarine construction and what was quoted by or what was said by Bill Studeman, the Director of the Central Intelligence Agency on January 18, pointed out quite clearly that we have a problem or that we soon will have. Let me read this quote once again. Bill Studeman said, ``The proliferation relates to the nonproprietary nature of technology,'' meaning that technology is not hardware or software, it is know-how, and he says, ``This means that the lethability, increasing threat reach, that is, longer ranges including ultimately ranges from problem states that can reach the United States toward the end of this decade.'' So the gentleman makes a good point with regard to submarines, and your director of your Democrat-controlled administration says clearly on the record there is a problem that we have to face.

Mr. SAXTON. I yield to the gentleman from Pennsylvania.

Mr. SAXTON. Mr. Chairman, the folks from the other side of the aisle always knew we were different. But they could always put up with it because we could not do anything about it. The difference in this debate and previous years is that we think our defense policy needs direction, and we think it needs a new direction. Let me tell you why we think it needs direction. Let me quote from the President's speech of January 25, 1994. He said, ``The budget I send to Congress draws the line against further defense cuts. It protects the readiness and quality of forces. We must not cut defense further.'' Republicans on this side of the aisle stood and applauded that night. Now, just 12 short months later, Congress received the President's proposed budget which seeks to cut defense spending by 5.3 percent, to the lowest level since 1950. At the core of the Clinton national security strategy is a policy which is in conflict with itself. That is why we need to set a new direction. On the one hand, the President has ordered our military engaged in more peacekeeping missions around the world than any other President in history. On the other hand, he has cut defense spending to the historic and dangerous low. We need to take care of our armed services, we need to take care of our people, we need to provide for the national security of our country. We note that a 12.8-percent gap exists between military pay and comparable civilian pay. We note that last year the Clinton administration did not request a military pay raise. We note that it is estimated that 17,000 junior enlisted personnel have to rely on food stamps. How can we provide for the defense of our country and our national security with facts like those emerging?

Mr. SAXTON. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I just would like to make a couple of points. Mr. Chairman, in spite of all of the rhetoric and the issues that have been discussed here in terms of dollars and all of these Star Wars pronouncements and redirecting priorities and all of these things, this debate really I think boils down to two subjects. The gentleman from Massachusetts just suggested I think, as the gentleman from Missouri did earlier, that there is no threat, and, therefore, we do not have to worry, and we should be doing other things. I would just like to remind the Members on the other side who may not even be aware of this that on January 18 of this year the acting Director of the Central Intelligence Agency said these words. He said: The proliferation relates to the nonproprietary nature of technology. This means that what will be proliferated will be new and more diverse forms of lethality, increasing threat reach, that is longer ranges including ultimately ranges from problem states that can reach the United States, toward the end of this decade. That is an appointment by President Clinton, the head of our Central Intelligence Agency. So, for the gentleman from Missouri and the gentleman from Massachusetts to say we should not worry about this threat flies in the face of the statement made by the chief intelligence officer of the United States. There is a threat. We all know there is a threat. Dick Cheney said there would be a threat in 1991 when he predicted that the Soviet Union was going to go away and we would have a whole new set of problems to face, one of which is the proliferation of nuclear technology and intercontinental ballistic missile technology. The other issue that I would like to address has to do with the misrepresentation of what this bill does. It is true that the bill currently says it shall be the policy of the United States to deploy at the earlier practical date an antiballistic missile system. I would say to the gentlemen on the other side and the gentlewomen on the other side that it is the unofficial policy of the United States today to ignore this whole subject. And then the bill gets to saying what the requirement is. That is the policy. Now what is the requirement? It says the Secretary of State shall be required to, in not later than 60 days after the date of the enactment of this act, the Secretary of Defense shall submit to the Congress, to the congressional defense committees, a plan for the deployment of an antiballistic missile system. And when we receive that system, that recommendation, Mr. Chairman, it will be our duty to decide whether we want to move forward with it, whether we want to accept it, whether we want to authorize it, whether we want to fund it, and the representatives of the American people will have that choice. So, as my colleagues talk about $5 billion to $60 billion and all of the numbers in between, we do not know what those numbers might be because we are asking the Secretary of Defense to use his best judgment to suggest to us the most appropriate path to take. So, this bill does not spend any money for these things. It does change the policy of the country from one that leaves us vulnerable to a threat that your chief of the intelligence agency says exists, to a policy to protect our country. And along the path to getting there we will have many decisions to make, like the ones my colleagues talked about today. So, Mr. Chairman, I hope that this debate, I know we are probably reaching a point where we are going to have a vote on this, but I want to say those things just from at least my point of view to clarify these issues.

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

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, during President Clinton's State of the Union Address, he purposed an increase in the minimum wage. The administration has asked for an increase of 90 cents over 2 years. This will raise the current wage from $4.25 and hour to $5.15 an hour. The President says that every person should receive a living wage for a good days work. I say three cheers to that, I cannot agree more with the President. I believe that every American should be paid a fair wage. However, the President and I disagree on how exactly we get there. President Clinton believes that the Government should mandate a wage. On the other hand, I believe that the businesses and workers should negotiate their own wages and allow the free market to work. Mr. Speaker, I think I can explain why the President and his administration have taken this flawed path. Their heart is in the right place, but they are stuck in the same rut they have been in for years. Jeff Joseph from the U.S. Chamber of Commerce explained it perfectly last week. Let me quote from him, when he talked about why the minimum wage mandate is bad: Primarily because it's a 60-year-old idea that doesn't fit in the global world we live in today. We shouldn't be talking about minimum wages and minimum skills. We should be figuring out how our workers can have world-class skills so they can earn world-class livings. You know, with the welfare debate that's going on today, people can get in the welfare system and earn about--the equivalent of $16,000 a year. So the debate should not be how do we get people from $8,000 to $9,000. The issue is how do we get people with the skills so they can go out and get off welfare and go out and earn $20,000 and $30,000 a year? ``And this 60-year-old idea that says there is an artificial minimum which gets put out there which only ratchets up the rest of the system with inflation and makes our valuable goods and services cost more in a world marketplace, it becomes a self defeating idea that hurts us economically.'' The administration has a superficial and incomplete understanding of the way markets work. This is not surprising from an administration populated by so many who have never held real private sector jobs, owned a business, or met a payroll. Last year during the national health care debate, Americans were stunned to hear their President lecture the owner of Godfather's Pizza not to worry about the Clinton health insurance mandate on employers because Godfathers could just increase the price of its pizzas to offset the cost of the mandate. In other words, in the world of ``Clinton-Commerce,'' mom and pop businesses can make as much money as they need by just raising the prices of their products high enough. Never mind income taxes, never mind unemployment taxes, never mind unfunded mandates; just raise prices. Obviously the President does not have a firm grasp on the law of supply and demand. This same lack of understanding is exhibited with regard to Government taxation. In the President's mind, Uncle Sam can raise as much money as it desires just by increasing tax rates high enough. A perfect example was his enormous retroactive tax increase that hit the Americans taxpayers with 2 years ago. Even with this retroactive tax increase, there is already solid evidence that Uncle Sam will collect less than half of what was expected. Next year, I am sure, that after everyone has had a chance to fully adjust their behavior, virtually all of the expected revenue increase will evaporate. Now he wants to apply the same kind of ``quack-economics'' to the minimum wage. Mr. Speaker, let me take a few minutes to explain why I believe the free market is a better judge of what a fair wage should be. During the President's State of the Union address, he said the following: ``I believe the weight of the evidence is that a modest increase [in minimum wage] does not cost jobs and may even lure people back into the job market.'' Well, he has it half right. If the Government artificially forces wages above the market wage, it will certainly entice more people into the job market. This is called the supply-side effect. But, what he seems to ignore is the demand-side effect. At these higher wages, who is going to hire all of these new job seekers? In fact, not only will employers have to pay more to hire new workers, they will have to pay their current workers even more if they are making under $5.15 an hour. As all serious economists recognize, the net effect of increasing the minimum wage will be to increase the supply of job seekers and decrease the number of job offers. In short, raising the minimum wage will actually kill jobs and increase the unemployment rate. Even liberal Democrats quickly learn the true effects of the Federal mandates they impose when they have to meet a payroll. For example, former Democrat Presidential candidate George McGovern learned this lesson first hand when he became an inn-keeper and restaurateur. A few years ago, in a Wall Street Journal, Senator McGovern lamented on how he too had to struggle with regulations, mandates and taxes imposed by the Federal Government on his small business. Mr. Speaker, compassionate politicians and well-meaning Government programs like the minimum wage cannot repeal the law of supply and demand any more effectively than they can repeal the law of gravity. In closing, I have here in my hand, more than 20 years of research, more than 100 studies completed by some of the most eminent economist from all over this country, that exhibit the destructive effects of the minimum wage. These studies show that an increase in the minimum wage will kill jobs and destroy opportunities for the same people ``compassionate'' liberals say they want to help. Mr. Speaker, later today I will place this list of studies in the Congressional Record so all Americans can see for themselves how a minimum wage increase hurts the very people it is suppose to help.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, each time I approach this podium with regard to this subject, I say the words ``This is a historic debate,'' and it truly is a historic debate because we are about making a major change in the gentleman from Texas [Mr. Barton] and the gentleman from Illinois [Mr. Hyde], the chairman of the Committee on the Judiciary, have led the way on this, to me they are true American heroes in the historic sense because it is very clear to me that in looking at the history of tax- and-spend policy and balancing the budget, or our failure to do so, it is a direct result of the fact that it is easier to increase taxes than it is to cut spending, and that is what this amendment is about, providing an opportunity for the American people to expect us to vote by more than a simple majority to increase taxes in order to balance the budget. In 1981, Mr. Chairman, there was a major effort to balance the budget, and we increased taxes. In 1983 there was a major effort to balance the budget, and the House increased taxes. In 1990 there was a major effort to balance the budget, and the House increased taxes. In 1993 there was a major effort to balance the budget, and again the House increased taxes. Today we are facing in this fiscal year a $180 billion deficit, and it is expected to grow. Our expectations of what this House will do to solve this problem cannot ignore history because every time we have gotten serious about it, we have increased taxes, reached into the pockets of American taxpayers, and said, ``Give us more.'' And each time, we have spent more. We still have a deficit after all these tax increases. So the amendment offered by the gentleman from Texas [Mr. Barton] would simply put in place a new rule that would require us to pass future taxes by a three-fifths' vote, and I commend the gentleman for his amendment.

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, this is truly an historic debate, and I do not think there is any question about where the sentiment lies in this House relative to a balanced budget amendment. I think there is a huge majority that favor a balanced budget amendment, probably 300 or more Members. The question is which one will we support. Will we support a balanced budget amendment that makes it easier to raise taxes, or will we support a balanced budget amendment that makes it more difficult to raise taxes to accomplish the goal that we want to accomplish? I favor the bill that was reported from the Committee on the Judiciary. It requires a 60 percent majority, or three-fifths, in order to raise taxes to balance the budget, and I have come to that conclusion after looking, at great length, to what has happened in our efforts to balance the budget over the last couple of decades. In 1991, Mr. Chairman, the Democrat leaders of the House, the Democrat leadership of the House, and the Republican President got together, and they worked out an arrangement where we would have a tax increase, and for every dollar of tax increases we would have $2 in spending cuts. I say to my colleagues, ``Well, if you asked yourself what happened, you probably guessed it. We got the tax increases, but we never got the spending cuts.'' And history repeated itself in 1983 because the same kind of arrangement was arrived at with the same kind of results, and then in the middle of the 1980's we passed the Gramm-Rudman bill, and the Gramm-Rudman bill began to work, and we began to see the level of spending ratchet down, even if it was ever so slowly, but, as it ratcheted down, it became very painful to make those spending cuts, and we repealed the Gramm-Rudman bill. Then our next major effort in 1990 was when George Bush got together with the Democrat leadership, and went out to Andrews Air Force Base, and came back here with a deal and said, ``We're going to have a $170 billion deficit remaining in 1995,'' and that happens to be this year, ``if we don't do something,'' and we imposed--I did not, but the House collectively imposed--the largest tax increase in the history of our country on the American people to solve the deficit problem. Well, it did not do it either. And in 1993 President Bill Clinton came to the House and said we have to do something about the deficit, and once again we raised taxes, once again the biggest tax increase in the history of our country imposed on the American people, and guess what? Next year our projected deficit is not $170 billion which was projected in 1990. It is $180 billion. So, Mr. Chairman, not only did we not take the easy out to increase taxes, but it also can be said quite clearly, ``It didn't work. Now this is bad tax policy, creates a lot of bad things, and particularly it has a bad effect on our economy, and I know that we like to do things around here on a bipartisan basis, and I know that if the three-fifths provision passes, Mr. Chairman, it will pass on a bipartisan basis. So, I look at the history of tax increases, look at the effect that they have had on our deficit, and I ask for support for the three- fifths provision.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I commend the gentleman for bringing this amendment to our attention. As you know, this amendment to the House Rules provides for a three- fifths or 60 percent vote as a necessity to pass any income tax increase. I first introduced this concept in the form of a rule change on Tax Freedom Day, May 8, 1991. I recognized then, as I do now, that our choices in methods used to balance the budget involve two very difficult types of decisions. First, do we raise taxes, or second, do we hold down spending to bring the budget into balance. History shows quite clearly that when faced with those two difficult options, this House has historically opted to increase taxes. Why? Simply because it has always been the easier of the two. For example, in 1990, in the name of deficit reduction, the House leadership went off to Andrews Air Force Base with President Bush and his staff and, in the name of deficit reduction, arrived at an agreement to increase taxes to once and for all put this deficit problem behind us. It didn't work. reduction, this time led by President Clinton and the Democrat leadership, Congress foisted the biggest tax increase in this country's history upon the American people to once and for all get the deficit reduction problem behind us. It didn't work either. The fact of the matter is that, in 1990, the Andrews Air Force Base tax deal was put together because we had projected a horrendous $170 billion deficit by 1995. Today, after two tax increases and our failure to hold down spending, the deficit at this year's end is projected to be $180 billion, that's right, $10 billion more than had been projected previously in 1990. Once again, I point out that this is after the two largest tax increases in our country's history. We're not fooling anyone. Congress has always taken the easy way out and we have never solved our deficit problem by raising taxes. The problem, as one Joint Economic Committee study shows, is that for each dollar in tax increases we have historically increased spending by $1.59. Therefore, it is clear that the route of least resistance, increasing taxes, has not worked. This rule change will tend to put better balance in that process. Some have indicated a concern regarding the constitutionality of this measure. Let me put those concerns to rest. I would like to quote from an article that appeared in the Washington Times on December 20, 1994 by Bruce Fein. Supermajority voting rules are constitutional and legislative commonplaces. The U.S. Supreme Court blessed the constitutionality of supermajority restraints on the tax and spending propensities of government in Gordon vs. Lance (1971). At issue were provisions of West Virginia laws that prevented political subdivisions from incurring bonded indebtedness or increasing tax rates beyond limits fixed in the West Virginia Constitution without the approval of 60 percent of the voters in a referendum election. Writing for the majority, Chief Justice Warren Burger stressed the political incentive for prodigality when the cost can be saddled on future generations without any political voice: ``It must be remembered that in voting to issue bonds voters are committing, in part, the credit of infants and of generations yet unborn, and some restriction on such commitment is not an unreasonable demand.'' The burden of federal income tax rate increases, unlike bonded indebtedness, must be fully borne by current votes. But they typically are targeted at a minority slice of the electorate, such as those increases championed by the Clinton administration and enacted by the 103d Congress. And the revenues generated by tax rate increases are characteristically dedicated to spending programs that benefit voters who escaped the tax increase--for example, food stamps, Medicaid, welfare, housing, job training, education, and farm subsidies. Mr. Solomon's 60 percent supermajority voting rule for tax rate increases is thus a healthy corrective to the natural inclination of simple majorities to fasten an unfair proportion of the costs of government on minorities. The same is true regarding Mr. Solomon's recommended ban on retroactive rate increases that invariably mulct a small percentage of the electorate. Support this rule change. It is an essential element in restructuring our fiscal process. Mr. Speaker, I include for the Record the article from the Washington Times of December 20, 1994 entitled ``Solomon's Wise House Discipline'' on this subject, as follows: House Rules Committee chairman-designate Gerald Solomon deserves laurels for proposed rule changes that would counteract the propensity of legislators to levy unfair or oppressive taxes to fund run-away spending. Mr. Solomon will recommend to the 104th Congress rules that would prohibit retroactive increases in federal income tax rates, and would require at least 60 percent House majorities to approve prospective rate jumps. These types of procedural checks on majoritarian foolishness or over-reaching are neither unconstitutional nor novel; they represent praiseworthy efforts to overcome skewed political incentives that systematically divorce government taxes and spending from public sentiments or the nation's future welfare. Indeed, the House and Senate should require supermajorities to approve legislation that would increase tax levies of any sort (not just federal income tax rates), increase federal government spending, or impose substantial spending mandates on states, localities or private enterprise. Supermajority voting rules are constitutional and legislative commonplaces. For instances, two-thirds majorities in both houses of Congress are required to override a presidential veto or to propose constitutional amendments, and a two-thirds Senate vote is required to ratify treaties or to convict of an impeachable offense. Many state constitutions prohibit or tightly circumscribe the power of the legislature to levy new taxes or to increase bonded indebtedness. And U.S. Senate rules require supermajorities to end filibusters or to waive balanced budget requisites for proposed legislation. Thus, the Uruguay Round GATT implementing bill necessitated a 60 percent majority to waive the Senate's balanced budget rule. The U.S. Supreme Court blessed the constitutionality of supermajority restraints on the tax and spending propensities of government in Gordon vs. Lance (1971). At issue were provisions of West Virginia laws that prevented political subdivisions from incurring bonded indebtedness or increasing tax rates beyond limits fixed in the West Virginia Constitution without the approval of 60 percent of the voters. in a referendum election. Writing for the majority, Chief Justice Warren Burger stressed the political incentive for prodigality when the costs can be saddled on future generations without any political voice. ``It must be remembered that in voting to issue bonds voters are committing, in part, the credit of infants and of generations yet unborn, and some restriction on such commitment is not an unreasonable demand.'' The burden of federal income tax rate increases, unlike bonded indebtedness, must be fully borne by current votes. But they typically are targeted at a minority slice of the electorate, such as those increases championed by the Clinton administration and enacted by the 103rd Congress. And the revenues generated by tax rate increases are characteristically dedicated to spending programs that benefit voters who escaped the tax increase--for example, food stamps, Medicaid, welfare, housing, job training, education and farm subsidies. Mr. Solomon's 60 percent supermajority voting rule for tax rate increases is thus a healthy corrective to the natural inclination of simple majorities to fasten an unfair proportion of the costs of government on minorities. The same is true regarding Mr. Solomon's recommended ban on retroactive rate increases that invariably mulct a small percentage of the electorate. Experience teaches that spending bills are characteristically spendthrift. The reasons are twofold: The benefits are ordinarily concentrated and stimulate strong lobbying efforts by the beneficiaries while the costs are ordinarily diffuse. The logarithmic rocketing of Social Security spending illustrates that political phenomenon. It speaks volumes that in 1988 when Congress enacted a catastrophic health insurance law for Medicare recipients fully funded by risk-based premiums, the elderly immediately screamed for and obtained its repeal because they believed the benefits were not worth the price if they were the payors. In other words, Medicare recipients would oppose the expansion of Medicare spending if they were required to bear the cost. Spiralling government spending also is politically attractive because a hefty portion of the cost through budget deficits can be fastened * * * [From the Washington Times, Dec. 20, 1994] Tax Increase Limitations If the tax and spend profligacy of Congress seemed confined to some special, urgent, and transitory national need, then the justification for supermajority voting rules would be weak. But the profligacy seems endemic to contemporary politics; the federal budget has invariably been in deficit for a quarter of a century, and has become so habitual to lawmakers that deficits less than $200 billion are oxymoronically styled ``austerity.'' Federal mandates that require states, localities, or private enterprise to incur substantial costs to provide benefits to constituents or employees should also confront supermajority voting rules. They are more alluring to Congress than the most charming temptress; the mandates gain the federal lawmakers popularity with the beneficiaries while escaping the unpopularity of increased taxes to cover the costs of service. The justifications for the presidential vote elaborated by Alexander Hamilton in Federalist 73 equally support the wisdom of Mr. Solomon's proposed rules of legislative self- restraint. Hamilton praised the veto as a ``salutary check upon the legislative body, calculated to guard the community against the effects of faction, precipitancy, or of an impulse unfriendly to the public good . . .'' Acknowledging that the veto might prevent the enactment of good laws, he rejoined: ``[T]his objection will have little weight with those who can properly estimated the mischief of that inconstancy and mutability in the laws, which form the greatest blemish in the character and genius of our governments. They will consider every institution calculated to restrain the excess of lawmaking . . . as much more likely to do good than harm. . . .'' Mr. Solomon's proposed supermajority voting rule for tax rate increases is a commendable self-imposed legislative complement to the constitutional veto power designed to block improvident laws. Indeed, the rule should be broadened to reach all bills that would raise taxes or spending. It should be remembered that the Constitution itself is a testament against simple majoritarian rule; it thus smacks of obtuseness to interpret that anti-majortiarian charter as militating against congressional self-restraint in lawmaking.