Brad Sherman

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, let us put this in context. This bill would actually cut roughly $50 billion from Federal revenues once it is fully phased in. It affects only 2 percent of the richest American families, most of the taxes collected from those who have over $10 million in assets. This bill provides not 1 penny in tax relief for those who make $10 an hour, but total tax relief for those with assets of over $10 million. We went to the Committee on Rules with the Sherman-Stenholm amendment to say at least let us make this bill dependent upon the country being on the right fiscal track. At least do not give up the $50 billion unless Social Security and Medicare are secure, unless we are going to pay down the debt by 2013, and unless we have eliminated deficits. And the Committee on Rules said no. What is particularly severe is that just a few weeks ago this House considered the Miller-Young bill, which would protect the legacy of all Americans by providing roughly $1 billion, one-fiftieth of the cost of this bill, $1 billion, to acquire the lands that are environmentally sensitive and pristine and need to be protected for prosperity. And the Shadegg amendment was allowed by the Committee on Rules, requiring that protecting the legacy of all Americans to our great outdoors be contingent upon these same certifications, namely that the debt would be paid off by 2013 and Medicare and Medicaid would be secure. So what we have here is a Committee on Rules that says, when we are trying to protect the legacy of all Americans, they will allow an amendment that limits that bill's effectiveness to only if certain fiscal certifications can be made. But when we are talking about the legacy of multimillionaires, literally heirs to multi-million dollar fortunes, then fiscal responsibility is not even an issue that this House can discuss on the floor. I will point out that this bill will assure a dramatic cut in major contributions to universities and hospitals. Those institutions will be here asking for Federal help. We will not be able to give it to them because $50 billion will be taken out every year of the funds available to the Federal Government. And, finally, this bill means higher taxes for widows and widowers. Under the present law, widows and widowers pay no estate tax and get a full step up in bases of the assets they acquire for income tax purposes. Under this bill that step up in bases is severely limited. So if my colleagues want to deprive the country of $50 billion and raise taxes for widows that is what this bill and this rule would do.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, last night, I spoke for 5 minutes to try to list the disadvantages of the estate tax repeal bill that we will deal with tomorrow. Unfortunately, 5 minutes, or perhaps not even an hour, is sufficient to list all those disadvantages. First, let us put this bill in context. Once it is fully phased in, it will cost this country $50 billion a year. All of that tax relief will go to the richest 1 percent to 1\1/2\ percent of American families. Basically all of the tax relief goes to those with assets of $10 million and more. Mr. Speaker, this bill provides $50 billion of tax relief basically for families with assets of more than $10 million and provides not a penny of tax relief for people who make $10 an hour. Mr. Speaker, we tried to add an amendment to this bill to say that its provisions would become applicable only upon certification, that the debt will be paid off by 2013, and that Medicare and Social Security will remain solvent. The supporters of this bill on the Committee on Rules refused to even allow the House to debate that Sherman-Stenholm amendment. So we have before us a bill that makes no attempt at all to provide tax relief for working American families. It costs us $50 billion whether or not that drives Social Security and Medicare into the red or not. But the disadvantages continue. Mr. Speaker, this bill will dramatically cut charitable giving. Now, I am not talking about charitable giving when somebody puts $5 or $10 in a collection plate. But if one goes to any college campus or major hospital in this country and one sees the buildings named after the multimillion-dollar donors, those are the donors who have consulted with their estate planning lawyers before they made that gift. Those are donors who decided to give only knowing that they would save 50 to 75 cents out of every dollar on their taxes for what they gave to the universities. Those universities, not getting those charitable contributions will come to this House and ask us for money; and we will say, sorry, we cut Federal revenues by $50 billion in the estate tax bill. We cannot help you. Mr. Speaker, when one goes to the universities in the future, the buildings will not have names, because the charitable contributions justifying naming a building after someone will not be made. Mr. Speaker, this bill, however, actually increases taxes on one group of people: widows and widowers. It takes away from them most of the step-up in basis which reduces income taxes on the sale of assets that they acquire from their deceased spouse. So while providing $50 billion of tax cuts, it increases taxes on widows and widowers. The bill is supposed to make it easier for family businesses to stay in the family; yet not a single statistic has been put forward as to how much the estate tax is driving families who choose to sell their businesses nor whether it is better for the economy to sell businesses to those who really want to be in that business rather than those who inherit them. Finally, Mr. Speaker, this bill is certain to be vetoed. So it is a show, a show of where we stand in terms of our values; but mostly, it is delay. Because if instead this House worked together, we could provide reasonable estate tax relief for upper middle-class families who are currently caught either paying the tax or caught having to draw long estate planning documents bypass trusts, extra tax returns every year for widows and widowers, all in an effort to escape a tax that was never designed to be applied to them anyway. So I have introduced a bill that would say that, if someone inherits assets, they also inherit the unified credit. So that every husband and wife could pass to their children $2 million in assets without paying a single penny of estate tax and without having to deal with bypass trusts, Form 1041 special income tax returns, and all of the complication the present law afflicts them with. Mr. Speaker, there are 50 billion reasons to vote against the bill that we will consider tomorrow.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, on Friday, we are going to take up a bill to abolish the estate tax, a bill that has about as much merit as the prediction of the gentleman from Indiana (Mr. Burton) that the Pacers will defeat the Lakers in the upcoming series. Let us first put this tax in context. Only 2 percent of American families pay a single penny of estate tax. This is because the tax is designed so that a husband and wife can leave their first $2 million, first $2 million to their heirs without paying a penny in tax. So this tax is for those who are asked, do you want to be a millionaire, and literally became millionaires, $2 million. Literally millionaire, that word meaning someone who inherits a million dollars. The tax, of course, does not fall upon the decedent but rather on their heirs. The tax falls exclusively on billionaires by definition. The tax is an obnoxious tax as all taxes are obnoxious. But if we are going to start to abolish taxes, we ought to start abolishing the ones that hit working families the hardest. This is a tax that falls exclusively, not on the fruits of the effort of the person paying the tax, but on the fruits of inheritance instead. Now, we are told that this tax represents double taxation. Let us put one thing in context. When someone makes an investment, buys some stock for $1,000, holds that stock until the stock is worth $1 million and leaves it to their children, there is no tax on that $999,000 profit. The reason is that there is an estate tax on those assets. Those who propose to abolish the estate tax while continuing the current provision that provides a step up in the basis of assets received from a decedent are not arguing to abolish double taxation, they are arguing to abolish single taxation. In fact, the amount of revenue that the Federal Government gives up through allowing that step up in basis is quite significant, even when compared to the total revenue generated by the estate tax. I would point out that, if we want to abolish double taxation, let us start by providing a credit for every working family equal to the sales tax that they have to pay, so that somebody who is trying to make it on 6 bucks an hour or 9 bucks an hour goes out and buys goods in their State, goes out and buys food and clothing, that we care for that working American first and worry about that double taxation where somebody makes 6 bucks an hour, makes a certain amount, loses a chunk due to Federal taxation, and then sees a portion of that net pay going in State sales tax. We are told that many businesses are not continued in family ownership and that somehow that is terrible for the employees. But we are given only the statistic that the heirs of small businesses choose not to continue those businesses. We are not told why. Does the son or daughter of a farmer want to be a farmer? Sometimes yes, sometimes no. If they choose not to be in agriculture, is that traceable to the estate tax? Only by a few stories, a few analyses, no statistics. We are told that family businesses are sold and that is bad for the employees of those businesses. Are we given any statistics as to what happens when those family businesses are sold? No. Nor are we told whether those family businesses are sold because there is a Federal estate tax or for some other reason. In fact, we have special provisions in the estate tax law designed to minimize and delay the effect of the estate tax on those whose inheritance is made up chiefly of a farm or chiefly of a closely held business. Those tax provisions are availed of, I believe, roughly 6 percent of the time. That means we are abolishing a tax that 94 percent of those paying the tax have nothing to do with small business, or at least nothing to do with those provisions. Mr. Speaker, I regret only that 5 minutes does not allow me to even scratch the surface of the disadvantages of this bill. I look forward to the debate on Friday.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, a few minutes ago I became aware that this hour of time to speak before this House was available. I thought about it for a moment. I am confident that my presence here will not adversely affect the ratings of other cable television shows, many of which are made in our area. And so I figured I would take this opportunity even though I have not had the chance to prepare and my remarks may not be quite as crisp as I would like. I would like to address a number of different topics that I have been thinking about, particularly over this last district work period. The first is an odd attempt by those who claim to love Ronald Reagan to rewrite the history of the fall of the Soviet Union. We know what the real history was. The Soviet Union looked powerful. We spent on our defense, fearful of Soviet aggression and expansion, and Ronald Reagan led us in those efforts. Our deficit grew. We tightened our belts domestically. We did so because we were told that the Soviet Union could expand, that it was powerful, that it could emerge as the most powerful nation on Earth. In 1991, to the surprise of just about everyone both inside and outside the Soviet Union, the Soviet Union began to collapse. That is what really happened. It is kind of disconcerting to think that all the experts in all the capitals did not foresee such an enormously important event. And experts are reluctant to admit that they cannot always see the future. But what is worse is that those who have come to idolize Ronald Reagan have started to rewrite history. In their rewriting of history, Ronald Reagan foresaw as early as the early 1980s that, within a decade, the Soviet Union could be pushed into the dust bin of history, that Reagan knew that the Soviet Union had begun to corrode from the inside and far from being a challenge to the United States, in fact, it was a nation that could not survive. These supposed supporters of Ronald Reagan ascribe to him an omniscience and all-knowingness, that they think is complimentary. In fact, what these supporters of Reagan are doing are besmirching Ronald Reagan's character, attacking his honesty, and telling us that our former President is a liar to the American people. Time and again, President Reagan came before us in this hall, I was not here, stood and delivered the State of the Union address and rallied America to spend more and more on our defense. He never told us it was offense. He said it was necessary to prevent Soviet expansion, not some secret plan to force the Soviet Union into collapse. Ronald Reagan came before the American people and told us the Soviet Union was a powerful threat and would remain so for quite some time. He urged us to embark upon military expenditure projects, some of which would last a decade or 2 decades because, he told us, the Soviet Union was a threat. Now, those who claim to be Ronald Reagan's ideological descendants, some who claim to be his friends, tell us it was all a lie, that Ronald Reagan knew that the Soviet Union had corroded from the inside, that he knew that these expenditures were not necessary to defend us but rather were part of a secret plan to force the Soviet Union to spend more and more on its defense in a dangerous game in which the Soviet Union would be faced either with the prospect of launching a nuclear strike or consenting to an arms race that it could not win, an arms race launched against it by a Reagan administration with a secret plan to drive it into destruction. Ronald Reagan never told us that we were engaged in such an effort. Ronald Reagan never told us that we were trying to push the Soviet Union to destruction, that they would face a moment at which they would blame us and would realize that either they would launch a military strike or go into the dustbin of history. He never told us this, because he never believed it; and the Soviet Union in its dying hours did not believe it, either. The Soviets knew that their system collapsed of its own weight. Only retroactive American arrogance would say that the other superpower collapsed because of something we did here in Washington, D.C. The fact of the matter is Communism does not work, and in the last decade or two, both Communist giants have ceased to embrace their ideology; and without that ideology they have ceased to be exporters of Communism, ceased to have confidence in Communism, and it has shaken them to their roots. Are we going to say that Communism lost favor in the Soviet Union because of American hostility and Communist ideology lost favor in China because of American friendship? That either friendship or hostility from America creates the same result? I think not. Communism does not work. Russia and China realized it. This forced a crisis of confidence in both places. The Soviet Union not being one nation but rather an amalgam of nations held together by a failed ideology collapsed, and China has moved from the ideology of Communism to the ideology of nationalism overseen by a relatively small group of oligarchs and local potentates that control the economy. To say that it all happened according to a plan is to dangerously rewrite history. While I talk about the Reagan administration and the collapse of the Soviet Union, it leads naturally to a discussion of Star Wars, an issue that is still before us. Just because the Soviet Union is no longer intact does not mean that we are safe. In fact, the world is more complicated and more dangerous. There are those who have come before this House and suggested that the world does not have to be a dangerous place if only we developed a missile defense system. Now, Mr. Speaker, I would like to see us continue to research in this area, and when our technology has advanced to the point where we can provide some reasonable defense at reasonable cost, deployment is certainly called for. But let us not fool the American people. Those that cannot hit us with an ICBM, those who cannot hit us with an intercontinental ballistic missile will be able to smuggle nuclear weapons into our cities no matter how effective our missile shield. A nuclear weapon is about the size of a person, some smaller than a child. And anyone who has been in Southern California or probably just about any major city in this country is aware that every year hundreds of thousands, every day thousands of illegal immigrants are snuck across our border not just from the southern border but the northern as well; that illegal drugs are smuggled into America with relative ease, and this is by people being paid a few hundred dollars to sneak a person into the United States, marijuana importers or smugglers, criminals bringing in bales of marijuana for a few thousand dollars in compensation. How difficult would it be to sneak a nuclear weapon into an American city? A nuclear weapon smaller than a child does not need ventilation, does not need to be fed. Children who are smuggled into America scream and cry. Nuclear weapons would not. So imagine that we had a perfect defense against Iranian or Iraqi or North Korean missiles. What would those countries do? They would smuggle a weapon or two into an American city, hire or kidnap an American scientist to come look at it, detain that American scientist until it could be moved to another apartment or another city, and inform our government that in some apartment, in some city, in some State in this country, there was a nuclear weapon in the custody of someone reporting to Baghdad or to Tehran. I would like to see a defensive shield shielding us from intercontinental ballistic missiles. But let us not fool the American people. That is just one small element of our defense. And if we spend a trillion dollars building a roof over a building that has no walls, we will have been misallocating resources. I am not sure that we can police our borders well enough to prevent nuclear weapons from being smuggled here, but I do know that a missile defense shield is of only modest use as long as our borders remain porous. We need to focus our attention on the rogue states that are currently developing nuclear weapons and might be willing to use them even if they faced the threat of annihilation from our nuclear weapons. And we need to cut off money, investment funds, from going to the regimes of North Korea, Iran and Iraq, because all three of those countries are trying to develop nuclear weapons. North Korea has agreed to stop its program, and I leave them aside. We can discuss them separately at a different time. But let us focus for a while on the two great enemies or rivals that we face in Southwest Asia. We do need to prevent the government in Baghdad and the government in Tehran from getting their hands on money. When investment capital flows into those two countries, when money is loaned to them, money is given to them, export markets are given to them, when Iraq is allowed to sell its oil and not spend the money on food for its people, then money is in the hands of those who would wish to develop nuclear weapons and whom as I have pointed out will face little difficulty in smuggling them into the United States. Unfortunately, our efforts to stem the flow of money to Tehran and Baghdad have been set back in several different ways. Today, Mr. Speaker, it was revealed that Iran, having suffered hundreds of thousands of casualties in a war of aggression launched by Iraq 2 decades ago, now is allowing Iraq to use its coastal waters to evade the U.N. blockade, evade U.N. sanctions, sell a billion dollars perhaps every year of oil, and this would not be money in the oil-for- food program controlled by the United Nations. This is money directly into the hands of the Iraqi military. Mr. Speaker, we could spend a trillion dollars on a missile defense system, but if we do not stop those oil tankers from leaving the Strait of Hormuz, if we do not prevent that oil from being exported, we are literally allowing Saddam Hussein to build nuclear weapons and then we can worry about how to keep them out of the United States. What concerns me, Mr. Speaker, is that our policy toward Iran has been ineffective. The ineffectiveness is shown today by Iran allowing that Iraqi oil to be exported. Now, we are told that the ships that come from Iran down into the Persian Gulf pass a checkpoint controlled by the revolutionary guard. We are told the revolutionary guard does not report to the President of Iran, and so we should not get bent out of shape if they allow those oil tankers into their coastal waters. The fact remains that in Iran, the president is not the head of their government or military. The supreme leader is. That leader controls those revolutionary guards, and those guards have allowed those tankers to use Iranian coastal waters. Iran has said, well, we need help in stopping these ships. All Iran has to do is announce that those countries that are enforcing the U.N. blockade are allowed into Iranian coastal waters, allowed within 12 miles of its coast, and we will be able to shut down these illegal Iraqi oil exports. But instead, Iran lets the tankers go by the checkpoint and claims they cannot do anything to stop it and will not let United Nations ships or, rather, American and British ships detailed to enforce the U.N. blockade, will not allow them in their coastal waters. Mr. Speaker, this is a dangerous situation; and it shows that our policy toward Iran, especially in the last 2 months, has been mistaken. Two months ago, the Secretary of State announced unilaterally, without really much consultation with Congress at all, certainly without any congressional encouragement or approval, the Secretary of State announced that the United States would allow Iran to export to the United States pistachios, carpets, caviar, dried fruit; and many people joked, how important could that be. Mr. Speaker, first it is symbolically important, because if America will do business with Iran, business as usual, if America will open its markets to these nonenergy exports of Iran, then how can we turn to Europe and Japan and tell them not to do business as usual with Iran on a bigger scale? How can we today turn to Japan and Germany and tell them to stop buying Iranian oil because Iran is clearly complicit in the illegal export of Iraqi oil? Certainly it weakens our position. These exports, these non-energy exports from Iran, are important to Iran. They are its major non-energy exports. They pale into insignificance in dollar amount compared to oil, but reflect on this: Iran will always get the world price for its oil. Nothing we do is going to change by one penny the amount of revenue Iran gets for every barrel that it exports to a world thirsty for its oil. In contrast, those other exports, the carpets, pistachios, et cetera, those exports need every market they can find to try to push up the price, and by opening up our markets we invigorate the world market for those Iranian exports, exports as to which there is no fixed world price, exports that are important to the Iranian economy. Some 5 million people, it is reported, work in the Iranian carpet industry. That is just one of the four imports. We would think that today the State Department would react, react to these illegal shipments through Iranian waters and cut off Iran's access to America's markets. My fear is that that will not happen. Every time there is an opportunity to make a unilateral concession to Iran, we seem to do it and do it quickly, unilateral concession after unilateral concession. The latest pat on the back that Iran has received is a $231 million loan from the World Bank. The U.S. voted against that loan, but we certainly did not tell our European allies that we would take their votes in favor of that loan as a reason to perhaps reexamine other aspects of our foreign policy. We were good losers. We accepted the defeat. This calls into question how we provide foreign aid. Mr. Speaker, I have come to this floor in the past to support American foreign aid. I think we should do what we can to help the Third World develop, to help the poorest people on this planet survive. But the recent action by the World Bank threatens America's support for foreign aid. That support is not all that deep to begin with, but how do we go back to our districts and explain that America participates in the World Bank, its capital was provided in significant part by the American taxpayer, and the World Bank disbursed $231 million of loans to Iran; money that is fungible, money that allows the Iranians to spend their oil resources and oil revenues on their military programs? This is going to be a hard sell. Mr. Speaker, sometime this month we will be dealing with the foreign ops appropriations bill. At that point, we will be asked to appropriate hundreds of millions of dollars to the IDA program administered by the World Bank. We have to be aware that money of the United States disbursed to that program could be lent on a concessionary basis, could be lent at very low interest rates, pay-us-when-you-feel-like-it terms, to such countries as North Korea or Sudan, or any other country that claims to have a good project and is very poor. North Korea and Sudan are very poor because of the evil of their governments, not because of a lack of world aid. How are we going to go back to our constituents and say, these hundreds of millions of dollars were turned over to an international organization free to make loans to some of the most evil nations or evil governments, I want to stress evil governments, on this planet? Better we appropriate these same funds, and I do not want to see a reduction, I want to see, if anything, an increase in our foreign aid, and provide these same funds to entities under the control of the United States government or entities where we at least have a veto power, so these funds are loaned or given only for projects in countries that have some minimal respect for human rights? I look forward to working with Members of the relevant subcommittee and of the Committee on Appropriations to see what we can do to make sure that when we go back to our districts and defend foreign aid, we can say that all U.S. tax dollars are going for projects in countries that we can support. Mr. Speaker, this is an additional reason why the loan to Iran was not only a poor decision but one that was ill-timed, as well. Not only does Iran today, a few days after the loan, decide to facilitate Iraqi evasion of U.N. sanctions, not only does Iran sponsor terrorism and is on the State Department terrorism list, not only is Iran, along with Iraq, one of the two greatest threats for possible destruction of American cities at such time as they develop nuclear weapons, but Iran a year and a half ago decided to continue its oppression of its small Jewish community, just as it oppresses those of the Baha'i faith. The Iranian government since its revolution has executed on trumped up charges 17 members of its small Jewish community. Well over half of that community has fled, and now 13 Jews are on trial in the city of Shiraz on the most trumped up charges in trials that would have made Josef Stalin ashamed, trials where the only evidence is the apparently tortured or coerced confessions of the defendants in which the defendants confessed to crimes they could not possibly have committed. Mr. Speaker, here in the United States we live in a multi-ethnic, multicultural society in which people of any ethnic or religious group may be found in our national security agencies, and yes, may be found among those few who commit espionage. Mr. Speaker, we have had British-American spies, we have had Jewish- American spies, we have allegedly had Chinese-American spies. Anybody of any ethnic group could find themselves in a position where they are the custodians of our national secrets. Iran is just the opposite. No one of the Jewish faith is allowed near anything of any military or national security significance whatsoever. Mr. Speaker, these 13 are accused of spying for the CIA, and I put forward that we could not be the world's only superpower, we could not have emerged in this powerful position, if our CIA went to Iran looking for spies and decided to hire people from the small ethnic group that are prohibited from getting anywhere near any of the information our CIA might be interested in. These charges are absurd. The World Bank loan to Iran, as this trial continues, was the kind of mistake that imperils American support for foreign aid and American support for the World Bank, and imperils a relationship that has recently been celebrated by the President in his farewell tour, farewell as President tour of Europe, involving ties that are certainly disrupted when European nations say, we will ignore the trial of the 13 Jews in Shiraz, we will ignore Iran's other problems, and when they will force the World Bank to take American capital and money borrowed on the strength of American capital and hijack that money to Tehran. Mr. Speaker, I would now like to shift my focus to a bill that will come before this House I believe on Friday, and that is a bill to repeal the estate tax. At the outset, let me stress that 98 percent of all Americans, when their wills become operative, do not pay a penny of estate tax. This is a tax paid by only 1\1/2\ percent of all the families in America. Yet, to read some of the letters, to listen to some of the rhetoric on this floor, we would think that the estate tax was the most burdensome tax on American working families. Estates of under $2 million will, after the current law becomes hopefully effective, pay absolutely nothing, as long as some law and estate planning documents are drafted in advance. Mr. Speaker, I introduced a bill that made this law I think less burdensome on upper middle class American families, and said that $2 million could be left by a man and wife or a husband and wife, to their children with no estate tax, even if they did not prepare a bunch of estate planning documents in advance. This bill was designed to liberate widows and widowers from these bypassed trusts, complicated legal documents, almost required of them by our current estate tax law. But that bill did not get a hearing because there is an effort here not to liberate upper middle class families, and of course, those of lesser means are already exempt, but not to liberate upper middle class families from the estate tax and from the burdens of doing estate planning. The plan here is to abolish this estate tax altogether. The estate tax is a painful tax. It is a bad tax. I hate the tax. I hate all taxes. Every single one of them is painful. There is no way for the Federal government to get money that does not have a bad effect on those who are required to pay. The question is not whether the estate tax is a bad tax, but whether it is our worst tax. I ask Members, is a tax that 98\1/2\ percent of all Americans are exempt from, is that our worst tax? Or is it an income tax and a FICA tax that falls so heavily on the working poor? Must we first eliminate a tax that falls chiefly on those with estates over $10 million, or must we first eliminate taxes on those who are making $10 an hour or less? Should it be $10 million and more, or $10 an hour or less? Where should we focus our generosity? Where should we focus our tax cuts? Mr. Speaker, there is an earned income tax credit, but it is not available to many of the working poor, and is not available to any that do not have children in their homes. So we have a situation where we are told that the estate tax diminishes the incentive to work because somebody working at age 40 or age 50 or age 60 is thinking ahead to the point when their estate plan would become effective, in their eighties or nineties, thinking ahead to what the estate tax law might be at that point, knocking off work early and going to the golf course. Maybe it is happening, maybe it is not. But let us talk also about the effect that our current taxes have on the working poor, people who are called upon to work the second job to support a family, people who are called upon to get off of welfare and to enter the work force, and we tell them, we are going to take a chunk of your money, of your paycheck, to support the social security system, and I support the social security system. We are going to impose an income tax. We are not going to give you a tax credit for the social security tax you pay, and we will give you no tax credit for the State sales tax that you pay. People who make less than $10 an hour are paying a lot of tax. What about them? Are they affected by incentives? Are we to say that the ability to leave the second $10 million to your kids 20 or 30 years from now is what is uppermost on the minds of somebody building a business, but that the size of today's paycheck is irrelevant to a person who is working two jobs? I do not think so. Yes, all taxes have an adverse impact on incentive, the incentive to work, the incentive to participate in the economy. But I venture that there is a far worse effect on our economy from taxing those who make less than $10 an hour than taxing those who have more than $10 million. I would also point out that before we cut the estate tax, before we eliminate the estate tax, we ought to make sure that we are not endangering Social Security, that we are not putting ourselves in a position when we will not be able to provide any pharmaceuticals to those who are on Medicare, some who need $1,000, $5,000, $10,000 a year of pharmaceuticals to survive. Mr. Speaker, they retired believing they had Social Security and now find that they are insecure, find that they do not have the wherewithal to pay for the pharmaceuticals that they need to survive. Mr. Speaker, what will come before this House on Friday is a bill to repeal the estate tax before we have made Social Security secure, before we have made Medicare recipients secure. Every Medicare recipient today knows that tomorrow they could be diagnosed with a disease requiring $5,000 or $10,000 a year of pharmaceuticals for which they will get no Federal aid; and we are told that the most important thing we can do with the available Federal funds is to deal with a tax that falls most significantly on those with more than $10 million. Mr. Speaker, I suggest that we need to explore a number of avenues. Now, I do not want to ignore the adverse effects of the estate tax. It does make it more difficult to leave a business or a family farm to the next generation. And we hear statistics about how businesses are not always left intact to the next generation and we are told that it is the estate tax. It is not always the estate tax. The son or daughter of a farmer does not necessarily want to farm. The owner who builds a business from nothing to a $50 million business may find that his sons and daughters feel themselves unqualified or just disinterested in continuing to own that business. There is no proof that family businesses will stay in families if only we reduce taxes on those with assets of over $10 million. Finally, Mr. Speaker, one little secret about the estate tax. No one will tell it to us. That is that at every major hospital complex, nonprofit hospital, at every major university in this country, if we abolish the estate tax, the buildings will not have names. I am not saying that we will not be able to find our way around campus. That is not the problem. The problem is that gifts, major gifts to our universities and hospitals will slow to a trickle. If we go to any campus today, we see this building is named after the Smith family and that building is named after the Cohen family and we wonder why. The answer is simple. The families involved made huge gifts to the university, huge gifts to the hospital, motivated in part by the fact that those gifts will not be subject to the estate tax. Charitable giving at the low end, the $5 and $10 put in the collection plate, would not be affected by a repeal of the estate tax. But at the high end, when people are bequeathing millions of dollars to universities that in their graciousness choose to name buildings after the donors, at the high end where people make gifts that are income tax deductible in their 80s, knowing that not only do they get an income tax deduction today but perhaps if they die in their 90s they get estate tax relief as well, those gifts are motivated by the fact that 60 or 70 percent of the gift's value is represented by a tax deduction. That $5 million Smith building cost the Smith family only 30 percent of $5 million. What is going to happen when we repeal the estate tax? The universities and hospitals will be here saying: now, Congress, you have to appropriate some special money for us. But how will we do that? We will cut our own revenues by $17 billion a year. The colleges, the universities, the hospitals will not come here and tell us about this because essentially they do not want to bite the hand that feeds them. Speaking of the hand that feeds them, I have had a lot of town halls in my district. I have heard hundreds of questions, hundreds of complaints. I am out in the community almost every day that I am in California. Mr. Speaker, at these public gatherings, I cannot remember a single occasion when someone has come up and said: let us abolish the estate tax. Mr. Speaker, I hate to admit it, but it is a sin of which virtually everyone in this House suffers or is guilty. I also spend time raising money for my campaign and for the campaigns of my colleagues. Not a day goes by, or not even a couple hours go by. If a couple of hours are spent talking to those who might make major contributions, the estate tax comes up every time. Not with every person, but certainly in every hour or two. The reason for that is that this tax does fall upon those who can most afford to come to fundraisers. I think that we in this House need to pass campaign finance reform for a lot of reasons, but one of them is that we spend too much time at fundraisers, and we hear too often too repeatedly from that 1\1/2\ percent of Americans who pay the estate tax, who happen to be the same 1\1/2\ percent of Americans who donate the most money for political campaigns. Mr. Speaker, if we do not stop and think about it, if we do not filter it out, we are going to come to the conclusion if one serves in this House that the whole country is concerned about the estate tax, because in the average month we hear about it five, 10, 20 times. We have to remember that every one of those times was not out at the community Little League, was not at a visitation to a senior center, was not at a widely publicized town hall, but in nine out of 10 cases, or maybe 10 out of 10 cases, it was through a friend that is a supporter of either us or our colleagues here. Yes, if we serve in this House, we need to keep in touch with people, and sometimes that is thrown askew when the fundraising burdens and the time commitments of that are imposed upon us. Mr. Speaker, I would like to comment just briefly on Governor Bush's Social Security plan and some of the rhetoric surrounding that plan. Governor Bush has turned to young people and said that they only get a 1 or 2 percent return for the money they put in Social Security. What he has not said is that the first two generations to participate in Social Security did incredibly well. Social Security brought us out of the Depression as much as any program. And the first two generations to participate in that program contributed for only a portion of their working lives and received the benefits, benefits that many are still receiving today in their 80s and 90s. So what does this mean? It means that today's Social Security tax is paying for our grandparents' retirement. This was never a pension system where our money is saved exclusively for us. Rather, our money is being used to fund the retirement of those who went before, just as their money went to fund the retirement of those who went before, and we can trace it back to the Depression generation. Now, we are told that the new generation does not have to contribute to pay for the previous generation's retirement. We are going to have their money diverted into separate individual accounts and that anything else would be unfair. Mr. Speaker, we cannot simultaneously take all the funds that are coming into Social Security and say that is the money of the people who put the money in and continue to fund the Social Security payments to those who are receiving checks today, people whose tax dollars, FICA contributions were used to pay the prior generation's benefits. The proposal that the governor has put forward is to take one-sixth of the money, virtually, that is now going into the regular Social Security Trust Fund and divert it into special assets owned by those who contribute the funds. I wish we could promise that. I wish we could do that. But before we start bestowing multitrillion dollar benefits, new benefits, why do we not make sure that the program can continue to pay the existing benefits? Another huge benefit promised by the governor of Texas is that if one were to die before reaching 65, their family gets a huge check from Social Security. Or if they were to die at age 68 or 69 or 70, before they have received their actuarial expected benefit, the family receives a giant benefit. That is a wonderful promise. I wish I could make that promise. I would be a lot more popular if I made that promise. But what do we do to those who live to 90 or 100? Do we say that those who live less than their average life span get their money back and those that live longer than the average life span stop receiving benefits? There is no solution offered by the governor of Texas. Two huge benefits promised; no source of revenue to pay for them. A sixth roughly of the money diverted. Let us make Social Security secure, and then we can focus on whether we can do better. Mr. Speaker, I have talked about a number of topics. Topics that are complex topics that I do not get enough time to study about, read about; and it leaves me longing for a greater level of intelligence. Mr. Speaker, there are those working on greater levels of intelligence today. There are those engaged in silicon chip engineering who are creating more intelligent machines all the time. And there will come a time when the silicon chip-driven machines rival humans in intelligence. There are genetic engineers mapping the human genome and within a few decades they may be in a position to create a more intelligent human being, perhaps one that could have dealt with all of the topics confronting this Congress with greater wisdom than I have been able to muster. There are those dealing with nanotechnology, technology where things are manipulated at the atomic and molecular levels, technologies that offer a chance to engineer either from biological materials or from electronic materials or from a combination of the two a level of intelligence way beyond today's computers, way beyond today's animals, and perhaps way beyond today's humans. Speaking of intelligent humans, on August 7, 1939, Albert Einstein wrote to President Roosevelt and brought to his attention clearly and crisply the importance that nuclear technology might have for the future of the world. In just a few years, that nuclear technology literally exploded. What was the high and unusual science of 1939 became the public policy issue of 1945 and beyond. We today are still wrestling with the political, the international, and the ethical issues of nuclear power and, of course, nuclear weapons. Would it not have been great if we had gotten a bit more of a head start? Would it not have been good for humankind if the scientists had come to us 20 or 30 years before the nuclear weapons were created and told the world's political leaders that the genie will soon be leaving the bottle and it is time to develop a code of ethics and central understandings that will fit the new technology? Now, some more than 50 years after nuclear weapons, we are still struggling with the ethical issues that they create. Well, I do not know how many years we have before what I refer to as remembered intelligence poses even more severe ethical issues for us than nuclear weapons do. Let me bring a few of them to our attention. I know this may sound like science fiction today, but I do not think anyone familiar with science would say that these are not real possibilities. I am not saying this decade, maybe not next decade, maybe not in the lifetime of those of us who have lost our hair, but certainly within the lifetime of some of the younger folks in the back of the room. First, we will see genetic engineering that will either create or offer to create our slaves or our masters. Today dogs are a man's and woman's best friend. They are great pets, and a few of them are engaged in work, shepherding sheep, for example. Today's dogs have been bred, not genetically engineered, just bred to be friendly, docile, and obedient. There are a few who think it raises ethical issues, but most of us view a dog's intelligence as below that of self-awareness and consciousness and are quite happy to have dogs that are obedient, docile. But what happens when the genetic engineers start developing more intelligent canines? What happens when we start having dogs as intelligent or more intelligence than apes? Fortunately, I do not think we are going to face this issue in the next decade. But we are going to face it this century, and we are probably going to face it before we figure out what to do with it. At what point must we recognize other life forms as being protected by our Constitution? How intelligent must a genetically engineered animal be to be worthy of our protection and respect? I do not know. Likewise, we have seen many science fiction shows where scientists start with human DNA and deliberately try to create a being that is less intelligent or simply more docile than the average human form, and we are told to imagine a race invented for slavery. I think all of us recoil at the ethics of that. But will we recoil with the same level of revulsion if the nearly as intelligent as human or perhaps as intelligent as human docile race is engineered from canine DNA or simian DNA, perhaps someday if we are not careful, human DNA? But not only may there be genetic engineering that invents those entities which some would wish to enslave, genetic engineering, whether it starts with simian DNA or human DNA, could very well invent a level of intelligence well beyond that of any of us here, perhaps even beyond that of the Albert Einstein I quoted earlier. Then how should human kind react? That which can be done with genetic engineering may also be done with silicon chip engineering. A book I have not had a chance to read bears the interesting title the Age of Spiritual Machines. How many decades is it before the computer screen lights up with the question, am I alive? Why am I here? Should there be any ethical limitations on creating computers with intelligence, not just to balance our checkbooks or to figure the trajectory of the rocket, but computers intelligent enough to ask the spiritual questions? I do not know. I do know that it will take a panel of Einsteins to give us some guidance as to what our laws should be. This is going to be a tough issue. I am going to propose probably next Congress, if I am fortunate enough to be here, if there is interest by some of my colleagues, perhaps we could work on it this month or next month, that we create a national commission on the ethics of engineered intelligence to try to give some guidance to those lawmakers that will come after us in dealing with the issues of silicon or carbon-based intelligence that approach or exceed that of today's human being. I do not know how to deal with these issues. It is a tradition in this town that, when one does not know what to do, one creates a commission. There is also a tradition in this town to wait till the last minute, to wait till some development is going to impair jobs in our own districts before we get serious about the issue. I would say that these are issues, and there are others as well that we ought to try to tackle at least at the thinking stage at the earliest possible time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, yesterday, the Committee on Rules rejected the Berman-Weldon amendment. That amendment would simply have provided that China loses its normal trade relations if it invades or blockades Taiwan. Now, China will look at this rule and look at the RECORD of this House and see a green light to blockade Taiwan. It would keep its trade with the United States at the same time. Taiwan can be blockaded easily. They merely need to hit one ship with a missile and announce that the next freighter will face a similar fate. If my colleagues vote for this rule, they are endorsing a record that tells China blockade Taiwan and your friends in America will keep trading with you. We have to defeat this rule regardless of what happens to the bill. Defeat the rule, demand the Berman-Weldon amendment, demand a chance to vote to say that we will send a clear message to China that, if it blockades or invades Taiwan, it loses its trade privileges.

Mr. SHERMAN

Mr. SHERMAN. The gentleman mentioned Motorola, which is bombarding the country now with an advertisement in which they hold up a cellular telephone and say that China has 1.2 billion people who might use cellular telephones, implying that American workers from coast to coast will be making cellular telephones and shipping them to China. I think the gentleman would agree that it is more likely that what Motorola sees there is 1.2 billion potential slave workers. They do not need them all. They do not need slave workers, but 1.2 billion people anxious to work for 10 or 15 cents an hour who can make the cellular phones and ship them here. Which does the gentleman think is more likely, that Motorola plans to make something here, paying union wages or high American wages, $10, $15, $20 an hour, and then sell the product to people who make 15 cents an hour? Or does the gentleman think there might be more profits in making something for 15 cents an hour and selling it to those Americans who still have good jobs?

Mr. SHERMAN. Well, right now China has been emboldened in a way that I did not think would occur this particular month. Clamping down on the religious group that the gentleman pronounces so well, clamping down on both Catholics and Protestants, a thousand nuns and monks expelled from their monasteries in Tibet, all in the weeks before we are supposed to vote. Imagine if this is the last vote. How many more Christian practitioners, how much more will they clamp down? Keep in mind the proponents of this deal postulate the idea that with increased trade there will be a challenge to the monopoly power of the Communist party of China. Now I do not think that challenge will occur, but if it does they will clamp down and do whatever it takes to maintain that monopoly power, and no matter how many executions occur, the worst the Americans can do to them is a really tough letter and a really long report, but they will not lose a single penny. That is not a situation that is conducive to human rights in China.

Mr. SHERMAN. Mr. Speaker, if the gentleman will yield, I will point out that we have given China most favored nation status on an annual basis several years in a row. Their 1999 imports from the United States are $1 billion less than 1998. So while their exports to the United States grows and grows and grows exponentially every year, our exports to them actually shrunk.

Mr. SHERMAN. Mr. Speaker, one other thing our colleagues should do when they first wake up tomorrow morning is ask their staff, is the Berman-Weldon amendment made in order by the rule? If not, then if we go forward tomorrow, we are giving the green light for a blockade of Taiwan. The least we could do to avoid miscommunication with China is to tell them that, if their friends in America are powerful enough to give them permanent most-favored-nation status, at least that status will disappear should they begin military action against Taiwan.

Mr. SHERMAN. Mr. Speaker, if I can interject, I want to commend to our colleagues, and I thank them for watching us instead of those Friends reruns on television, a dear colleague that I have addressed dealing with the Berman-Weldon amendment, summarizing why it is essential that this amendment be included in anything that passed this House; otherwise, we would be giving the green light to China to blockade Taiwan. A second dear colleague I would like to mention, this was delivered, I believe, to every Democrat in the House, it is a letter that arrived just hours ago from the President of the United States, and I want to, time permitting, respond to a few comments in it, respectfully, because they are from the President. The one comment I would like to respond to is the argument that this is going to lead to higher wages in China. The letter states, ``More Chinese workers will find jobs with foreign companies where they will get better paying conditions, and Chinese companies will be forced to compete. In China, you are dealing with upwards of 700 million workers. How many more jobs would our investments in China have to create before we had an effect on the price of laborer the compensation of labor in China?'' My fear is that it is not when the President says that more Chinese workers will find jobs in American-owned factories in China, that means fewer American workers will find jobs with American factories in the United States.

Mr. SHERMAN. Absolutely. We do not know how much worse things could get in China. Yes, they are pressing bishops and Catholic and Protestant workers in China now, but they have not publicly executed any of them because they are subject to annual review. If they have permanent trade relations with the United States, then 3 or 10 or 20 executions, whether it be of those practicing Christianity or those practicing Buddhism in Tibet, would subject China not to the possibility of losing its trade relationship but only to a harshly written letter from the United States, a report outlining just how terrible these violations were. When we look at China today and see how bad it is, we should not just look at how bad it is or how much better it might get but how much worse it might get.

Mr. SHERMAN. Mr. Speaker, I thank the distinguished gentleman from Ohio. Mr. Speaker, I am for trade. I am for engagement with China. I am for American involvement in international organizations that took the lead in keeping us involved in the IMF. But I am against isolationism, I am against protectionism, and I am against this deal. I want to focus in the minutes that I have on three new developments that occurred today, that I hope Members listening at home or back in their offices will focus on. But, before I do, I want to make a couple of comments building on what my distinguished colleague had to say. The gentleman pointed out that this whole WTO thing could take place without granting permanent most-favored-nation status to China. In doing so I think the gentleman focused on what this deal is really about. It is not about us getting access to their markets, it is about them having permanent access to our markets. Corporate America does not see China as a great place to sell things; they see it as a great place to make things to sell here. The best example of that is the fact that India is virtually as large as China, and I have gone the last 3 months without a single business organization saying, ``Oh, my God, there are a billion consumers in India,'' because China offers not a billion consumers, but the largest pool of near slave labor available to those who want to manufacture there and exploit the market here. They are not willing to make the major corporate investments in factories unless they are sure that they will have permanent access to the American market. Those factories ought to be built here. We should not be facilitating the construction of them in China. Mr. Speaker, this deal is good for profits; it is bad for working American families. It is good for the central committee of the Communist Party of China, which runs that country and has a monopoly of power and endorses that agreement; it is good for the Central Committee of the Communist party; it is bad for those who seek freedom in China. This deal is good for the People's Liberation Army of China, without whose consent China could not have made this deal. But while it is good for the PLA, it is bad for American security interests. There are three new developments. The first was brought up by the distinguished gentleman from Ohio, and that is the report issued by the U.S. International Trade Commission. This is the official government entity designed to evaluate trade agreements. The study was requested by U.S. Trade Representative Charlene Barshefsky, the chief administration point person on negotiating this deal. She asked for the study. The study came in and said, this does not just make our trade deficit with China permanent, it makes it bigger. Upon the release of the study, Ms. Barshefsky instead says that the study was premature. Well, that is obvious. A study that helps Congress reject this agreement is premature unless it is released after we vote. Mr. Speaker, this study came in right at the right time. It was commissioned by a trade representative who thought it would show that this deal was good for American working families. It proves the opposite. As the gentleman from Ohio clearly demonstrates, it costs us 872,000 jobs, but that is an underestimation, because all of the analysis of the U.S. Trade Commission was done on the basis that China would at least adhere to the written document. They have not adhered to their other documents, and in a control and command economy like China, they do not have to. Mr. Speaker, here in the United States, we publish laws, and businesses are free to do what they want as long as they do not violate those published laws; and if our published laws violate the WTO agreements, we get taken to WTO court. In China, a telephone call in the middle of the night from a commissar is all that it takes to get a business to do something else, and you cannot take a late-night phone call to WTO court. You cannot even prove it ever existed. All that happens is that that Chinese businessperson decides not to buy American goods. So the first and major development of the day is that the official government agency that our trade representative, the chief architect of this deal, asked to evaluate the deal says this deal is bad for American working families. It is going to cost 872,000 jobs, and I believe far more. The second major development was the submission to the Committee on Rules of this House of the Berman-Weldon amendment. The Committee on Rules is meeting now. I have been told to expect that they will not allow that amendment to come before this House. Why is that amendment so important? The amendment simply states that if China, after this agreement in joining trade relations with the United States, easy access to our markets, that if China invades or blockades Taiwan, that it loses access to our markets, they lose the PNTR. China will not accept this; hence, it is unlikely that the administration will accept it, and hence, it is unlikely that the Committee on Rules will accept it. I would like to be pleasantly surprised in an hour or two, although I do not think it will happen. What does this mean to the Chinese? It is sometimes said that China is inscrutable to the United States, that it is hard for us to know what their system is doing. Trust me, we are at least as inscrutable to them. But how will they interpret the proceedings this week in this House? An amendment was offered to say that if they invade Taiwan or blockade Taiwan, they lose their trade privileges. That amendment, if it is rejected, sends the exact opposite signal. Who is to blame the Chinese hard-liners if they regard our decision this week to pass PNTR and not condition it on whether Taiwan is blockaded or invaded, how are they to interpret that? They are educated in a Marxist approach which says that corporations are all powerful. They look at this House where they might see just a little support for that proposition, and they may very well conclude that their new corporate allies will defend them and defend open access to America's markets even if they blockade Taiwan. They could reach that conclusion even if some of us here who know this House better might reach the same conclusion. What conclusion will they reach when their trade grows, not to $100 billion or $120 billion? They will reach the conclusion that American corporations are even more dependent and more powerfully willing to defend access to the American markets, and that that access will continue even if they invade or blockade. If they reach that conclusion, it is not their fault for misinterpreting us. It is our fault for being ambiguous, because this House this week can stand up and say that no access to American markets will be available if Taiwan is invaded or blockaded, or we can do the opposite by remaining silent. So assuming this bill comes to this floor under a rule that does not allow consideration of the Berman-Weldon amendment, we should expect that China will interpret this as a green light and blockading Taiwan, bringing Taiwan to its knees is relatively, unfortunately, easy. During World War II, Hitler sent a fleet of submarines to try to strangle another island nation, Great Britain. He was almost successful. But what does China have to do to blockade Taiwan? All it needs is a press release. Imagine a press release from Beijing announcing that the next oil tanker arriving in a Taiwanese port will be struck by a Chinese missile. One press release, one missile. They may even destroy one ship. Would you want to be the captain of the second freighter or oil tanker on its way to Taiwan? The blockade is so easy for China to do, the only reason they do not do it is fear of American reaction, and if they can be confident of access to the American market. Well, I think we could call this bill the Taiwan blockade authorization act, because that is how it will be interpreted in Beijing. Mr. Speaker, we cannot put this genie back in the bottle. The issue has come before this House, and if we deliberately cover our eyes to the possibility that trade relations would continue while Taiwan was blockaded, that is the green light the hard-liners are waiting for. Mr. Speaker, we should be explicit in this bill. Confusion and mis- com-munication has started wars in the past, even among trading partners. Look at World War I, for example. So there is nothing but danger for our national security interests bypassing a bill that implies without ever stating it that China will have access to our markets even if it begins hostilities. So this is an issue before this House; we cannot ignore it. I see that the gentleman from Ohio has a number of other points to make, and I yield back to him.

Mr. SHERMAN. Now that we give guaranteed permanent entry to the U.S. market, multibillion dollar factories, the kind that make the high-tech products that we are still as of today competitive in, those can go to China as well and pay 15 and 20 cents an hour. So it used to be that I was only worried about the capital flight, that a billion dollar low- tech factory would be built in China when that same money might be available here to build a different kind of factory that could employ American workers and perhaps even making a different product. Especially our Republican colleagues are always talking about how we need more capital, how we have to encourage savings. Well, we could pass the biggest tax bill designed to increase savings and if it leads to another $30 billion in savings, all of which are corporations borrowing and investing in China, then we are exporting capital for the purpose of exporting jobs, and we can imagine what effect that has on wages. We have enough jobs in America, but we need a situation where there is the labor shortage that causes those jobs to be paying a living wage.

Mr. SHERMAN. So it is not just toys and tennis shoes.

Mr. SHERMAN. This is the kind of stuff that Americans could make competitively. I have laser printers made in the United States on my desk now. This is not like little toys that sell for a buck or two.

Mr. SHERMAN. Mr. Speaker, perhaps we should have a long engagement before we have a permanent marriage.

Mr. SHERMAN. Not with today's juiced baseball, you could not.

Mr. SHERMAN. Up until recently it was low-tech factories going to China to make low-tech products, the handbags the gentleman talked about. That was because one could not invest a lot of money in China if they were not sure that the products could come back to the United States because that was why they were building the factory.

Mr. SHERMAN. That is my final answer. If I can make a comment or two here.

Mr. SHERMAN. Zero.

Mr. SHERMAN. I do not think we export cell phones to China. I think we only export jobs to China.

Mr. SHERMAN. If the gentleman will yield, I think he makes an excellent point.

Mr. SHERMAN

Mr. SHERMAN. Mr. Chairman, I wish to bring two new developments to the attention of this House, developments that show that we need to negotiate a better deal. First, the International Trade Commission and the official authoritative body of the Federal Government issued a report. It says this deal will increase our $70 billion trade deficit and cost America 872,000 jobs over the next 10 years. That is right. Permanent NTR does not just make the trade deficit permanent, it makes it bigger. Second, the gentleman from California (Mr. Berman) and the gentleman from Pennsylvania (Mr. Weldon) presented an amendment to the Committee on Rules this afternoon which would simply state that China will lose its access to our markets if it invades or blockades Taiwan. This amendment is consistent with GATT. But I expect that the Committee on Rules will reject it because the administration will reject it because China will not accept it. Now, who is to blame? China? If it interprets the proceedings of this House as a green light to blockade or invade Taiwan, and if this House is willing to grant permanent NTR, even if China blockades or invades Taiwan, what would the other body do? What would the proponents of trade suggest? We must insist that the Berman-Weldon language is included in this statute. If it is not, then we are being vague when clarity is called for. We will be at fault if China is misinterpreting our mood, and we will be the precipitators of those in China who say they are free to invade Taiwan or blockade Taiwan. Keep in mind how easy it is to blockade Taiwan. It just takes a press release saying that the next freighter into Taipei or into Taiwanese ports will be hit by a Chinese missile, and that economy shuts down. We cannot allow misinterpretation. We need the Berman-Weldon language. Otherwise, this bill becomes the Taiwan blockade authorization act.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I am against isolationism, against protectionism, and I am against this deal. Trade with China should not end, but we need to go back to the drawing board. We accept over 43 percent of China's exports. They accept only .7 percent, less than 1 percent of our exports. Under those circumstances, we can negotiate a better deal. This deal is good for profits, but it is bad for American working families. It is good for the Chinese Communist party. That is why they want this deal so badly. And it is bad for those who want to unravel the power of the Communist party elite in China. This deal is good for the People's Liberation Army and bad for American security interests. First let us turn to the balance of trade. This deal will make permanent a system that has led to the most unbalanced trade in the history of affairs between nations, a $70 billion trade deficit as contrasted to just a $13 billion market for our exports. There is tremendous economic power here on Capitol Hill pushing this deal, but it is not from people who think they can make money by producing goods in the United States at labor costs of $20 and $30 an hour and sell them to China where people make 12 cents an hour; in fact, it is the reverse. The big profits, the big corporate push comes from those who would like to pay workers 12 cents an hour and bring those goods and sell them to Americans at American prices, American prices on which they can make tremendous profits. This deal makes China safe for U.S. investment, because, you know that whatever is produced in that factory by an American corporation with Chinese workers can be brought to the United States at huge profits permanently and without interruption, but I would like to bring to the attention of this House a new report issued by the government agency that is responsible for analyzing these trade agreements, the U.S. International Trade Commission, which reported today that this deal will increase our already enormous trade deficit and cost America 872,000 jobs over the next 10 years. I should point out that this report was officially requested by U.S. Trade Representative Charlene Barshefsky, the primary mover in the administration to get us to vote for this deal. She asked for the report. When the report said this deal kills American jobs, she said it was premature. I can understand why she would have preferred that the report be issued only after we vote. I prefer to get information before we vote. Second, on the issue of human rights; there are those that say that through engagement, we are going to undermine the power of the Communist Chinese party, but you know who does not believe that? The heads of the Communist Party of China. They know this deal will make them stronger; that is why they want it so badly. As for the dissidents in China, we do not know what they think, they have got a gun pointed to their head. Are they free to tell us? But most of the dissidents who have served time in China prisons and escaped to the United States are against this deal. Finally, I would like to move to the newest development of all, because it happened this afternoon. Two of our colleagues, the gentleman from California (Mr. Berman) and the gentleman from Pennsylvania (Mr. Weldon) went to the Committee on Rules with an amendment that is fully legal under GATT, and that amendment provides, as follows: Normal trade relations treatment shall be withdrawn if China invades or imposes a blockade on Taiwan. Mr. Speaker, I believe that the Committee on Rules will not make this in order, because it is not accepted by the administration, because, of course, it is not accepted by China. So we will be asked to pass this bill without the Berman-Weldon amendment, and that will signal China that it can continue to enjoy access to the American market even if it blockades Taiwan. We ought to make the opposite clear to them, but without the Berman- Weldon amendment, what is the message? That amendment was brought before this House or brought before its official Committee on Rules, it is part of the record of these proceedings. We asked that we be allowed to make it in order. If it is rejected, then who is to blame China for believing that this House has endorsed permanent trade with China, even if they blockade Taiwan. This is now the Taiwan Blockade Authorization Act. Vote no.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, tomorrow the World Bank meets. We will not have the huge demonstrations of a month ago. No one will be comparing this meeting here in Washington, D.C., to the events in Seattle. But they may play a more important role on whether the World Bank and its sister organization, the IMF, continue to have the support, precarious as it is, of the American people, and whether the World Bank continues to exist and foster in its present form. Mr. Speaker, I am among the strongest advocates in this House of our foreign aid program, our involvement in the world, and, up until now, our support for the World Bank and the IMF. Mr. Speaker, just a year-and-a-half ago over $500,000 was spent in a campaign designed exclusively to vilify me personally for supporting the IMF and the World Bank. I continue to support those organizations, yet I am not sure that that support can continue for long, because while I am a proud supporter of world development and of our foreign aid and of our efforts to try to have all of humanity live in dignity, I do not know if I can continue to be a proud supporter of the World Bank. You see, the World Bank garners its support from the community here in America that supports human rights and the dignity of men and women, and yet it will make a decision tomorrow that will indicate whether it deserves the support of those who are concerned with human rights. For one case, in one nation, has garnered the imagination of the world when it comes to human rights. I speak of the show trial being conducted in the City of Shiraz, Iran, in which 13 Jews face the absurd charge of being spies for the United States and Israel. Mr. Speaker, let me first give you and the House some background. The Jewish community in Iran is 2,500 years old. It arose out of the Babylonian captivity after the destruction of the first Temple. It is the oldest Jewish community anywhere in the world except Israel itself. For 2,500 years Jews lived in peace and in loyalty to whichever regime governed Persia, now Iran. In 1979 the Iranian revolution led to the creation of the Islamic Republic of Iran, and since then that Islamic Republic has found it necessary, or at least has decided, to oppress religious minorities. Their treatment of those who practice the Baha'i faith is well-known and is deplorable. For those who have practiced the Jewish faith, some 17 have been killed after trumped-up charges over the last 20 years, roughly one per year. It seems this is a regime that finds it necessary to keep this small Jewish community under control through terror and fear. I say a small Jewish community, because this community, which once numbered over 100,000, has now dwindled to 25,000 as people who have fled their ancestral homelands, homelands that trace their ancestors back for 2,500 years. They have left under the oppression, but 25,000 remain. But apparently the Islamic Republic of Iran is no longer satisfied with killing one of its Jewish citizens roughly every year, and so about a year-and-a-half ago it went out and arrested 13 and charged them with espionage. Now, why are these charges so absurd? Well, Mr. Speaker, we have grown up here in the United States, a multi-ethnic country, where people of all backgrounds and all religions are found in every part of our government, including our national security agencies. From the CIA to the Pentagon, our national security agencies look like America. So, anyone of any ethnicity, could, if things turned out wrong, grow up to be a spy. We have British-American spies, we allegedly have Chinese-American spies, there have been Jewish-American spies, and that is because people of all ethnicities and religions are found in the agencies that contain the most sensitive national security secrets. Iran is a very different country. No one of the Jewish faith is allowed near anything of national security significance. Now, I know the CIA occasionally makes a mistake, but to think that the CIA would, over a period of years, hire not one, but 13 individuals in Iran, each a member of a tiny group prohibited by their religion from getting anywhere near anything the CIA would want to know, it stretches all credulity to believe that the CIA would do that and that the United States could remain a superpower if that is how it pursued its national security and intelligence efforts. These charges are not only absurd, but the trials that began less than a month ago are also absurd. They are modeled after the trials of Joseph Stalin, trials devoid of public attendance, trials in which the prosecutor is always the judge, trials in which there is virtually no information, no evidence, except the hollow conclusionary and detailless confessions of coward confessions. Nothing has been proven at trial, except that the defendants are afraid. The information that they would have had access to would have been only information observable by anyone walking the streets of an Iranian city, and, of course, diplomats of countries, both friendly to and hostile to the Islamic Republic of Iran, walk those streets every day, every month, observing the same things, and with diplomatic immunity while they do so. So this trial has captured the attention of those in the world who care about human rights. Maybe it is because 13 people are so obviously innocent. Maybe it is because the trials so closely resemble those of the dark ages of Joseph Stalin. Maybe it is because the defendants are a remnant of an historically significant and dwindling community. But where does this leave the World Bank? The World Bank will consider tomorrow a package of loans to the Islamic Republic, and we are told that these loans will be used for humanitarian purposes. But let us remember that money is fungible. The money the Islamic Republic does not spend on building a sewer system in Tehran can be used to develop weapons, to field an army or to increase the reach of its forces of oppression and interrogation. Not only that, but this nearly one-quarter of a billion dollars in contracts will go only to those contractors and organizations in Iran tied to the dominant faction of the Iranian government, so not a penny will be spent that does not inure to those who are politically connected to the same government conducting these show trials in Shiraz. Now, we are told that the World Bank must make its decisions independent of politics, but one cannot ignore the results of a decision to be made tomorrow in Washington, especially when that decision does not have to be made tomorrow. It can and should be deferred. But beyond the human rights concerns, there is another issue that the World Bank should focus on. It may grow out of the human rights concerns, but it is a separate issue. No financial institution should be allowed to make a loan that imperils the success of the institution itself, and the World Bank, if it makes this loan, is sowing the seeds of its own impairment. American participation in the World Bank is critical to its survival, or at least to its success, and that participation depends upon the consent and acquiescence of a restive American public. The support for that participation comes from those who care about human rights, and to fund this loan this week is to turn to those in America who care about human rights and declare that the World Bank is on the other side; that the World Bank is happy to be an instrument, an instrument, of oppression. Now, there are those who will disagree with what the effect of this World Bank loan will be in Iran, but they do not speak with any expertise about what effect this loan will have on America and American support for the World Bank. Those who understand how foreign policy is made in a superpower, where the people are supreme, and most of them do not care very often about foreign policy, those who are involved in foreign policy and in the political process should warn the World Bank, as I do tonight, that a loan of this type undermines and corrodes the very thin pillars of support that the World Bank and the IMF have in the American public. If you say no to those Americans who care about the 13 Jews in Iran, if you say no to those Americans who care about human rights, then who will stand up for the IMF and the World Bank when the voices of isolationism and the voices of just spending less money on foreign affairs, when those voices bellow that it is time for America to reduce its commitment? I am not saying that an approval of these loans will lead to street demonstrations reminiscent of Seattle. It will not. I am not saying that the State Department or the Treasury Department will talk about cutting back its support or participation in the IMF and the World Bank if these loans are approved tomorrow, for there will be no such immediate effect. But those who study how foreign policy is made in a democratic country, where the people are supreme but only a few of them focus on these issues, will understand that over the next 3 years or 5 years or 8 years American support for the IMF and the World Bank are subject to corrosion if this loan goes forward. Certainly those who are voting at the World Bank tomorrow need to give the World Bank staff a chance to analyze these issues in greater depth, and certainly the loans themselves and the details of the loans need to be reviewed in greater depth than has been done to date. When the World Bank makes a loan, it tries to avoid obvious corruption, knowing that that is not only a waste of its money but a waste of its political capital. These loans will be under a level of scrutiny beyond those that the public has imposed on any other World Bank decision. Certainly these loans need to be reviewed for efficiency and absence of corruption at a higher level than the World Bank has ever analyzed loans, because here, here, not only does the World Bank stand to see a portion of its quarter billion dollars hijacked and diverted but it has a chance to have each detail of these loans and their expenditures reviewed with the greatest possible public attention, particularly in the United States. Certainly the board members, the shareholders at the World Bank, would be well advised, let the staff have some time. Let us see whether the details of these loans meet the higher standard than the World Bank, for its own interest, needs to impose on loans that will receive a greater level of public scrutiny than any other loans have ever faced, and let the World Bank staff review whether that institution can long endure and long survive as an organization with the active and enthusiastic support of the people of the United States if it acts precipitously. If the Bank votes tomorrow to ignore these concerns, it takes an irrevocable action or an action that appears to be irrevocable, that could eat away at the fabric of the Bank itself. If instead the Bank votes to delay considering these or if these loans are simply not on the agenda and no one puts them there, then the Bank can consider these actions in light of the concerns I have brought to the attention of this House and I hope to the attention of the Bank shareholders as well. Permanent Normal Trade with China