Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I ask unanimous consent that Amendment No. 6 in House Report 108-80 be considered out of sequence in the Committee of the Whole.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I yield myself 2 minutes. Mr. Chairman, this amendment brings back the level of funding for the first year to the level recommended by the President, the amount of $2 billion, which is the amount that is also in our budget resolution. The third reason is I would like to document and persuade to my colleagues, expert witnesses from Africa that are suggesting that it is going to be much more effective to start gradually and then increase the spending over the year. My amendment does not decrease the total 5 year commitment of $15 billion, but, rather, is consistent with what the President has requested, starting at $2 billion and then growing each year. I would like to read a letter from a former United States ambassador to several of those African countries. ``As the son of a medical missionary to Africa, a career State Department diplomat with over 28 years of service, mainly in Africa, and as the former United States Ambassador to Rwanda and Mali, I am well aware of the problems making foreign aid genuinely benefit the populations it was intended to impact. Throughout my career, I have been involved in rural health initiatives in Africa, and while there is great need to meet the challenge of AIDS in Africa, front-loading a program might well do more harm than good. There is great risk in squandering precious funds when expenditures are made without adequate controls or accountability. We also risk forcing our big-ticket solutions on Africans who may need more modest help in finding local solutions and building up their own capacity to deal with the challenge in the early year. ``Accordingly, I support the original emergency plan for AIDS relief proposed by the President that would launch this new initiative to $2 billion in '04 and steadily escalate spending over 5 years.'' Again, because we can maximize this money over the 5-year period, because it would be consistent with the President and the budget resolution, I hope Members support the amendment.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, as a former member of the Presidential Oil Policy Commission and as the current chairman of the Subcommittee on Research of the Committee on Science, I am convinced we are going to solve this problem of energy dependence. Through scientific research, we are going to find more efficient, better uses, we are going to develop conservation, and we are going to develop alternative uses of energy. But in the meantime, we need the exploring of oil and getting some of those resources until we come up with those scientific advances. We need this opportunity. Look, the people against this amendment are saying we are making ANWR better and so do not limit it to 2,000 acres. Let us make it better. Let us make the final decision on ANWR after we pass this amendment. And with that, I would just say it is an area less than 2 miles square in the millions of acres that are now in ANWR.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, there has been a lot of news, of course, about the war in Iraq. Where are we going and how long is it going to take to win the military battle. I think it is important that we do not underestimate the length of time it is going to take for the transition after we win the military battle. Bradley Smith and now some former Iraqi officials have suggested at least 2 years, maybe 2 years of martial law to get a society and a people who for most of their adult lives have never lived under any rule except Saddam Hussein. The transition to a democracy is going to take time. Brad also suggested that we should have a military base in Umm Qasr, down in the southeast corner of Iraq. How does all this play into probably the most extensive oil field potential for oil in the world in that country of Iraq? This last weekend, some suggested that we are fighting in Iraq because of our dependence on foreign energy. While that is not true, the consequences of our dependence are certainly serious. This first became very clear to many of us during the Arab oil embargo during the early 1970s when at that time I was serving on the presidential oil policy commission. We need this foreign energy because it is a vital component for fostering economic growth, but considering the situation in Iraq, regardless of the consequences and the sluggishness of the economy, we need to reduce our energy dependence by serving and developing new sources of energy, and that need has probably never been greater in this country. This is why the energy bill passed out of our Committee on Science last week will be on the floor very shortly. Oil and natural gas account for 39 and 23 percent of overall energy usage in our country. In the United States, domestic production of petroleum is nearly 8 million barrels a day, which includes 5.8 million barrels of crude oil and 2.2 million barrels of natural gas liquids; 8 million barrels a day in the United States. And while 11 countries have more petroleum reserves, we are currently the second largest producer in the world, behind only Saudi Arabia. Most of the new petroleum exploration taking place in the United States today is done by smaller companies. The bigger companies have decided they want to bypass the regulatory process, the environmental influence and the fact that we have already explored much in the United States for oil. So what we have left in the United States is mostly the smaller companies that are making this exploration. Historically, conservation has been the primary method of reducing our dependence. It has been successful and we have seen American energy efficiency increase dramatically. Since 1970, GDP, our gross domestic product, has risen by 170 percent while energy consumption is up by only 42 percent. The energy bill will help us do even better with a focus on more efficient appliances, electricity generation and certainly automotive transmission. Because a growing economy would tend to increase use, the energy bill boosts our efforts to develop alternatives to petroleum. Today, America consumes about 19 million barrels of petroleum a day, about 44 percent of which is motor gasoline. That means a new motor fuel would have a dramatic impact on U.S. usage. The energy bill increases research into ethanol and biofuels made from agricultural crops. Science and research get substantial increases from language that we have added to the bill in order to develop and perfect emerging technologies, including fusion energy and neutron source power, we have heard a lot about hydrogen cells for automobiles, and certainly improved clean coal technology. In conclusion, Mr. Speaker, our dependence built up slowly over decades. Unfortunately it may also take decades to reduce that dependence, even under the best of circumstances. Shocks and problems will continue to cause many problems for our economy and our foreign policy. Still, if we act now, research can secure the energy that the American economy needs to grow and produce and it can result in more and better good-paying jobs, not only for our generation but for our kids and our grandkids.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, I want to relate to a problem that I see as real in this country, so I am going to talk for a couple of minutes about losing our manufacturing base. Now, it looks like we are losing our high-tech jobs in this country. Then, secondly, how serious a situation is it, and then maybe third, what are we going to do about it. Over the last 30 years, we have lost our manufacturing base as we have made the transition towards a service economy. A lot of that service economy has been in the area of high technology. I happen to be chairman of the Subcommittee on Research of the Committee on Science, and one of the concerns is what is happening to outsourcing as more and more American companies are sending their engineering work overseas. In the last 2 years, in the last 2 years, we have lost over 560,000 high-tech jobs. Why is that? It is a situation where other countries are doing it cheaper. Companies have decided that they are going to outsource and put related factories and facilities in India, in the Pakistans, and any country where they can get these quality engineers to do the work cheaper; and of course, with our new technology and our ability to communicate so rapidly with the Internet, it does not make a great deal of difference whether one is down the hall or whether one is over in India or some other country. In relation to repairing automobiles, it is now suggested that within a few years, because of the computerization of those automobiles, a lot of the mechanical work is going to be done by computers, again remotely; so it is not going to make any difference if the local repair shop plugs in their computer or if it is done by some shop overseas. In the manufacturing industry, which I think we also have to be just as concerned with, we have, over the last 10 years, gone from almost 18 percent of our total working population in manufacturing to a situation today that is a little over 12 percent. If we care about the future of jobs and good-paying jobs for our kids and our grandkids, then it is a situation that we need to consider. What are some of the possible ways that we can deal with this problem? One, of course, I think is taxation, and we are going to be discussing that for the next several weeks. Our taxes now on business are approximately 17 percent higher than if that business were in another country. One of the keys that I see is doing a much better job with matching math and science education. This has to be a priority as we are starting to limit the number of foreign students that can come in and do our research work. On research, what do we think, I ask my colleagues, is the percentage of our research done at universities in this country that is done by foreign students? Over 50 percent. So science and math have to be a priority. We have had several hearings on science and math. The witnesses suggested that the learning in K through 12 is more a matter of excitement and enthusiasm and lighting a fire under people to be curious rather than filling a container with knowledge. I asked, when is this fire lit for science and math? And most of the witnesses said probably between 4 years old and 6 years old. So if we miss out on lighting the fire with parents that are interested, with communications that are going to stimulate the interest of those parents and those students and quality teachers, then it is going to be tough to light that fire in the future. In conclusion, Madam Speaker, I just suggest that it has to be a real concern for our future economy and for future jobs; and for the relative wealth and influence this country has, that we need to pay attention to losing our manufacturing base and now losing our high-tech base. Part of that solution has to be fair taxes, and part has to be a better job with math and science education.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today in recognition of the birth and life of my grandson, Nicholas Bradley Smith, my namesake. Born to Brad and Diane, on June 27, 1987, my wife Bonnie and I join Nick's other grandparents, Neville and Jennifer Monteith from Kitchener, ON, in celebration of his life. That year the first heart-lung transplant took place, astronomers at the University of California saw the first sight of a birth of a galaxy, and the US and Russia signed an accord to remove midrange missiles. That year the Dow Jones Industrial Average closed above 2,700 for the first time in history. Our economy was growing. Over the next decade government spending would outpace inflation and the national debt increased to monstrous proportions. It is my hope that we can reduce the national debt that will otherwise be passed on to this young man and his generation. We must work today to provide Nick with a better future, a sound economy, and the ability to achieve his greatest potential. Let us remember Nicholas Smith and all the other young people in this country. We leave our legacy to them. May it be a good one.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today in honor of the birth and life of my grandchildren, Selena Anastasia and James Azarial, born February 26, 1997 to Elizabeth and Fred Burnette. My wife Bonnie and I join with James and Selena's other grandparents, Bonnie and Charles Burnette, to celebrate these children. In James and Selena's birth year we made great advances in space technology. Onboard our flight to Mars was ``Sojourner.'' This roving device, the first autonomous vehicle to travel on another planet, sent back to earth chemical analyses of soil and rocks. Sojourner was one of the greatest achievements in our space travel history. Inventors play a unique role in our history creating new products to improve our way of life. Invention comes from the Latin, inventio, to discover or find out. Today, we continue to ``find out'' and create new ways to travel, grow food, communicate, and continue exploration of uncharted territory. I hope that for these children curiosity will always be their guide so that they and their generation will continue scientific research to invent ways to make their own lives better. I hope that as we consider legislation for these new issues we consider what we can contribute to our children and grandchildren by encouraging invention. I hope that we can leave Selena and James, and children and grandchildren everywhere, a brighter future because of our decisions today.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today in honor of the birth and life of my ninth grandchild, Alexander Frederick Burnette, born May 31, 2000, born to our daughter Elizabeth and her husband, Fred. My wife Bonnie and I join with Alexander's other grandparents, Bonnie and Charles Burnette, in celebrating Alexander. Alexander faces a great world of great opportunity. Scientific discoveries and advanced technology daily improve our lives. They allow us to live longer, better, and more productive lives. In the year of Alexander's birth scientists finished a map of the human genome. This was a huge scientific achievement which will help doctors and scientists improve our health and life. Today, we continue to push forward with scientific advancements. Like information technology and biotechnology breakthroughs of the past ten years, nanotechnology holds the potential to revolutionize our way of life. However, the science is still very much in its fledgling stage, so it is important that the federal government coordinate and fund basic research into the fundamental aspects of nanotechnology so that its potential can one day be realized. I hope that as we consider legislation for these new issues we consider what we can contribute to our children and grandchildren by encouraging new technologies. I hope that we can leave Alexander, and his generation every where, with a brighter future because of what we accomplish today.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today in honor of the birth and life of Claire Smith, born to our son Brad and his wife Diane on February 2, 1992. It was in this year on my birthday, November 5, that I was elected to the U.S. House of Representatives; 1992 was the international space year and my first committee assignment was Science. It is for Claire, and for all our children and grandchildren, that we in Congress continue to push the boundaries of science, invention, and technology, so that their lives, will be better and more productive in the years to come. My wife Bonnie and I join with Claire's other grandparents, Neville and Jennifer Monteith from Kitchener, ON in celebrating this young life and all the opportunities we have through science to make the future better for our legacy, those children and grandchildren like Claire Smith.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today in honor of the birth and life of our second grandchild, Emily Smith, born on March 9, 1989 to our son Brad and his wife Diane. The year of her birth was a time of change for America and the world. A new President, George Bush Sr., took office. More importantly it was the year that the world ushered in a new era of peace. On the second of May, Emily Smith was a just a few months old, but her future would be changed forever. It was in 1989 that the Berlin Wall fell and forty- five years of conflict and fear were soon behind us. It was a new era of prosperity, potential, and peace. As we stand here today decisive moments confront us, but we have the opportunity to give Emily Smith, and all our children and grandchildren, the peace that we knew in 1989. It is my hope that by our work and decisions today we can give them peace for tomorrow. My wife Bonnie and I join Emily's other grandparents, Neville and Jennifer Monteith from Kitchener, ON, in celebrating this wonderful person.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise today in honor of the birth and life of my grandchild, Frances Smith, born on November 4, 1998. My wife, Bonnie, and I join with Frances' other grandparents, Neville and Jennifer Monteith from Kitchener, ON, in celebrating this young life. Three days after Frances was born, John Glenn returned from his second trip into space at 76 years of age. Medical futurists predict that a person born in 1998 may very well live to an age of 110 or even 120 years old. The system of free enterprise in our country makes it possible for Frances Smith, and all our children and grandchildren, to make dreams a reality. As we stand in this chamber each day we must remember the potential of our youth and the strength of the free enterprise system. Those two things, bonded together, will continue the tradition of prosperity we have so long enjoyed. It is my hope that Frances Smith, the daughter of Brad and Diane, will never forget the achievements possible through the free enterprise system that can take us much further than John Glenn ever dreamed we could go.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise on this occasion to honor the life and birth of our tenth grandchild, Chauncy Smith. Born on March 20, 2001, to Brad and Diane Smith, Chauncy is a source of great joy to both me and my wife Bonnie, in part because he was named after my brother who was killed 44 years earlier when his jet fighter went down. We celebrate with Chauncy's other grandparents, Neville and Jennifer Monteith from Kitchener, ON. It is for this young life, and many others just like it, for which we make decisions in Congress each day. In 2001, the year of Chauncy's birth, we passed one of the largest tax cut packages in history bringing historic levels of tax relief to working families in America. I'd like to think that we did that to help assume a strong economic future. In that same year the events of September 11' forever changed the diplomatic landscape in ways still unknown to us. Today, we face great challenges as we seek a world without terror in an effort to avoid the fear we knew during the Cold War. As we consider the first pieces of legislation of this Congress, let us also consider the children and grandchildren who will bear the burden of our debt and the fears of our miscalculations. We must consider each bill with all the wisdom possible so that future generations do not bear our burdens and fear our fears, but, instead, live their dreams. As Abraham Lincoln said on December 3, 1861, ``The struggle of today, is not altogether for today--it is for a vast future also. With a reliance on Providence, all the more firm and earnest, let us proceed in the great task which events have devolved upon us.'' In this time of constant change may we remember and take hope in the great potential of our children and grandchildren and remember that our struggle today is for their vast future also.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would like to make some comments on the war in Iraq. Most of us voted for the resolution to authorize the President to use force in Iraq to help solve the problem of weapons of mass destruction. Voting for that resolution makes us at least somewhat responsible for the young men and women in the military going into harm's way. And even though we know it is the right thing to do, it still gives one pause for all of the suffering and the sorrow. Now we have several of our military who have been captured, or missing, or who have died. The challenge for this country is that if Saddam gets away with it, other tyrants in other rogue nations think that it also is going to be to their advantage to develop these weapons of mass destruction. This will make the world much less secure and this country much less secure. I pray for not only the young men and women soldiers, but for their families. When I was 21 years old, we got a phone call notifying us that my brother, Chan, who was 23, that his jet plane went down and that he was killed. That grief never left our family. So the sacrifice is great for families. I, for one, am convinced that the war is the right thing to do. If we were to delay, it would mean that much greater of a challenge for us in the future. Recently a newspaper in my district in Michigan ran an editorial saying that people have the right to protest against the war; and they do, certainly. But now that we are in the war, I think we should encourage everybody to rethink what protesting does. Before we went in, maybe you can protest and maybe it is going to end up in a decision not to be there. But now, we have thousands of our young men and women over there that need our support. We are in combat. Imagine an analogy where a mom did not want her son to go out for boxing because it is too dangerous, or football; but once the decision was made, does she not cheer him and go to the game and cheer him on? Or a mom and dad that did not want their daughter to go out for basketball because, after all, that was sort of wrong for a young lady to do. That was a boy's sport. But once that young lady goes out for the team, the parents cheer her on and say, good game, do your best. Or what happened in Vietnam when we literally spat on some of our soldiers and sailors when they came home? My point, Mr. Speaker, is that to demonstrate against the war makes the challenge for our military greater. As an old Air Force veteran I assure my colleagues that it is true, it makes it harder for our military, when people now demonstrate and say, look, you are doing an immoral thing, you are doing the wrong thing. It makes it that much more difficult. We are in it. Let us cheer for our team and give our total support for the action of our military men and women that are now over in this war in Iraq. Give them our prayers and certainly give their families and their loved ones our prayers.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I suspect that every budget proposal is somewhat partisan, but I hope we would try so that it would not be that. I congratulate the gentleman from South Carolina (Mr. Spratt). I think we are moving in the right direction. First let me just briefly, Mr. Speaker, represent what we have done in terms of veterans' benefits. Spending has grown 51.7 percent since our first budget in the majority for an average growth of 6.1 percent each year. That is almost three times the rate of inflation representing the dedication, hopefully of both parties, to take care of our veterans. Let me now talk about the important issue of what we have been doing on spending. As my colleagues can see by this chart, discretionary spending increases have averaged 6.3 percent each year since 1996 and 7.7 percent each year in increased spending since 1998. So we should be concerned with the dramatic growth in spending. What has this done to the total debt of this country? We are looking at the total debt of this country going to $10 trillion in the next 10 years. The question, Mr. Speaker, is how do we control the debt? Do we increase taxes to control the debt we are leaving to our kids and our grandkids, or do we do it by cutting back on spending? This budget that the Republicans are suggesting says let us start holding the line and slow down the increase on spending, and if anybody does not believe there is at least 1 percent of fraud and abuse and waste in government spending, then they are mistaken. As a person that has worked in the administration, I will guarantee my colleagues we can save on percent. Let us move ahead with this Republican budget. The gentleman from South Carolina's (Mr. Spratt) budget, according to the Committee on the Budget, increases taxes by $126 to $128 billion. Even the Blue Dog budget increases taxes by something around $124 billion between 2006 and 2011. So let us not reduce deficits with tax increases, let us do it with holding a line on spending, Mr. Speaker.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, tonight I would like to follow up the previous Special Order by starting out with some comments on the budget, on spending, on the tremendous deficit that we are leaving to our kids. Then also, I want to, on this eve of the war, finish up with some concerns that I have with such countries as France and Germany and Russia, I think putting our kids at a little greater risk. But first let me react to some of the comments that we have been listening to, that we need to increase spending on some of these important items. Let me start with the tax cut. When the gentleman from Maryland (Mr. Bartlett) and I first came to this Congress in 1993, one of the first events was a Democratically controlled House and Senate; and with a new Democrat President, we increased taxes more than taxes have ever been increased in the history of this country. The tax cuts that are being suggested now do not commence to negate that huge tax increase that we had in 1993. But let me talk about trying to attract more voters by suggesting that Congress should spend more money. For a moment, look at what has happened over the last 10 years of spending history. This is how much we have been increasing spending. As my colleagues can see, fairly level, and it started to go up more and more in 1995, 1996, and 1997, and started taking off in 1998. Discretionary spending of the United States has increased an average of 6.3 percent each year since 1996 and 7.7 percent each year since budget balance was reached in 1998, showing a tremendous increase in the growth of government. And one can just project, if we continue to spend two and three and sometimes four times the rate of inflation, then government takes over; and instead of empowering people in the United States, instead of empowering businesses to encourage them to expand and develop and offer better and more jobs, government has been at the feeding trough to use more of those dollars by increasing taxes across the country. How do we deal with a situation where we have made our taxes so progressive that the lower-paying 50 percent of income tax payers in this country only pay 1 percent of the total income tax revenues. So we can see, it is easy to suggest that any tax cut is a tax cut for the rich, since the upper 50 percent pay 99 percent. In fact, the upper 10 percent pay almost 84 percent of the total income taxes. So we have put more and more taxes on higher incomes to discourage that kind of effort, and we have put more and more taxes on business. Really, business taxes are a tax that that business, in order to survive, has got to pass on to consumers in the fashion of increased prices for their particular product. So the increased price we pay for any product we buy, part of that is really a hidden tax, because you pay it to business to pay their tax, and they have to charge a price that is going to allow them to survive. Mr. Speaker, the gentleman from Maryland (Mr. Bartlett) and I have been trying to convince Congress on both sides ever since we have been here of the unfairness of the increased spending that has resulted in increased borrowing that is going to end up leaving our kids a mortgage. I am a farmer. The gentleman from Maryland (Mr. Bartlett) is a farmer, plus a scientist; and in the farming community, you try to pay off some of that mortgage so that your kids will have a better chance. Well, right now, we are sort of pretending that our problems today are so great that somehow it justifies going into the huge debt that we are going to leave our kids and our grandkids. Mr. Speaker, I yield to the gentleman from Maryland (Mr. Bartlett).

Mr. SMITH of Michigan. Mr. Speaker, on the definition of surplus, we say the trust funds have surplus; but actually, what they have is IOUs, so when programs like Medicare become insolvent or have less money coming in than enough to pay promised benefits in 2012, or when the money coming in from Social Security taxes is less than what is adequate to pay promised benefits for Social Security in 2017, all we have when we go to that box is a bunch of IOUs. So what is government going to do to pay back those IOUs? They are going to increase taxes again, or they are going to cut benefits, or they are going to probably, most likely, increase borrowing again. So they go again and bid up the available money and borrow that money to pay back to make sure we pay Social Security benefits. But even then, by the mid-2030s, the trust funds are going to be gone and the insolvency of many of these programs is going to be devastating in terms of the burden that it puts on our kids.

Mr. SMITH of Michigan. But maybe an analogy, sort of like using one credit card to pay off another credit card. So we borrow money from the trust funds to pay down the public debt, and then a lot of politicians in Washington brag that we are paying down the public debt of the United States, and with muscle-flexing and suggesting that we are going to put the Social Security money in a lockbox, and that lockbox was again nothing but IOUs where the government took the money and used it for a couple of years to pay down the debt or the Wall Street debt or the debt held by the public. That kind of hoodwinking I think has brought about a lot of suspicion of the American people with their Congress and with the White House and with Washington. Again, if we look at the tremendous growth, how fast we have increased spending of the Federal Government, if we simply went back to where we were 7 years ago, we would have a huge surplus on both the Social Security as well as the extra money coming in from taxes. So it is a situation I think where we have to ask ourselves the question, Do we want to reduce the debt that we are leaving to our kids? Do we want to do that by increasing taxes? And that is what the Democrat substitute proposal for the budget does; they increase taxes. They say, we will go along with the tax breaks for the lower-income; which, as I mentioned before, does not represent very much of the tax revenue coming into the government. But they say, we are not going to go along with the legislation that we passed 2 years ago that gives tax breaks across the board. In effect, it encourages savings, encourages investment, encourages businesses to expand. So we have to end up making that decision: Are we going to borrow money to pay our way, or are we going to increase taxes to pay our way? I suggest that there are a lot of expenditures of government, and, in fact, this budget, the budget that the Committee on the Budget turned out, says, let us look for waste and fraud and abuse, and figure that we are going to put the responsibility on the different departments of government to seek out that waste and fraud and abuse. Already we have identified more than enough to accommodate that 1 percent; to say, look, across the board we are at least going to have a 1 percent reduction in this time of war, so we can adequately make sure that we can adequately fund the military budget, the homeland defense budget. Those have been increased at the President's request, suggestion, in both of those areas. Where we have cut back is in other areas. If we are in a time of war, is it not reasonable to start prioritizing our spending, especially since that kind of traditional increased spending as if there is no problem, do more for this group, more for that group, do more for the old, do more for the young, have midnight basketball games so kids do not get in trouble, that is the kind of spending rampage that we have been on. What I am suggesting and what the gentleman from Maryland is suggesting is that that kind of spending that ends up having a deficit, let me define my definition for deficit, deficit is the annual overspending. Debt is when you take that annual overspending and add it up to the debt that we have for our kids and our grandkids. Mr. Speaker, I yield to the gentleman from Maryland (Mr. Bartlett).

Mr. SMITH of Michigan. Mr. Speaker, when we say leave it in the private sector, we say leave it in the pockets of the individuals that earned it. Do not have the kind of taxes on businesses that put our businesses at a competitive disadvantage to businesses that they are competing with in other countries. That is what we do. Right now we are charging our businesses about 18 percent more tax than the businesses in the other G-7 countries, in the other industrialized countries. So when we talk about this, the tax changes that the President is suggesting that are incorporated in this budget, what can we do to strengthen the economy? What can we do to encourage our businesses to invest and expand and have more and better jobs in this country? The other tax cuts, some of the other tax cuts, potential tax cuts, maybe should not be considered now; but let us at least look at the kind of tax incentives that can encourage savings and investment and business expansion.

Mr. SMITH of Michigan. Mr. Speaker, a survey was done of the businesses that inverted or moved to another country to pay their lower tax rate, but kept their jobs and their operations in this country. A survey was taken, and for over half of those companies it was a question of going out of business or reducing their expenses and taxes, one of the expenses, reducing that expense by roughly 17 percent that we overcharge compared to other countries, by moving their business overseas. So absolutely, rather than the suggestion in the Democratic budget that says let us punish those businesses that move their headquarters and their taxing location outside of this country by saying that they cannot move or else they lose a lot of the benefits, and we are not going to buy from them for military use, and we are going to punish them anyway in some form of additional taxes to discourage their moving out of this country, absolutely, I say to the gentleman from Maryland, the right decision is that we cannot put our businesses at a competitive disadvantage because of our gluttony to somehow raise more money through what I call a hidden tax, a very regressive tax like the gentleman suggests; because it says that the lower-income person that has to buy these goods has to pay a tax on this, they have to pay the extra price on the goods to accommodate the high taxes that we have imposed on business. It is not so, what is the good word, identifiable because it is not so obvious that people are paying another tax to government when they buy this product. It is sort of a hidden tax that has been politically an advantage, some people felt; but in the long run it discourages business expansion, and it discourages the kind of economy and the kind of strongest economy in the world that we have developed in our first 226 years. So absolutely, it is the wrong way to go. What we should be doing is making our taxes competitive with the taxes in other States, and part of the way to do that is to hold the line on spending. When the complaint is of cutting spending by 1 percent, the previous special order suggested that Republicans are suggesting a 1 percent cut, no cut. What it is is a slowdown in the increase in spending. Where I come from down on the farm, a cut is when there is less money spent one year than the previous year.

Mr. SMITH of Michigan. Mr. Speaker, let us discuss just a little what the imposition that this increased debt that we are leaving our future generations has on the potential of those generations to have a strong economy or strong incomes that they are going to be able to keep and raise their families with. Right now, servicing the debt, and $6.4 trillion is our current debt, servicing that debt costs approximately $300 billion a year; but interest rates are at record lows right now. So with interest rates, with the government able to borrow some of their money for about 2.7 percent, what if that interest rate goes up? What about when we have economic recovery and there is a greater demand for money? That interest rate, the interest rate in the early 1980s, was as high as 17 percent; so what if that $300 billion a year paying interest were to quadruple because of higher interest rates in the future? It would devastate those people that are trying to service that huge debt in the next generation, or years from now.

Mr. SMITH of Michigan. Also, sometime, someplace, somehow future Congresses are going to start thinking that we have to operate more like a family, more like a business, that someplace down the roads we have to start paying this debt down. Nobody is talking about paying the debt down. All they are talking about is, well, maybe the debt right now is manageable and let us put the war on terrorism or whatever happens in Iraq aside for a moment because we are funding that. And I think it is reasonable to borrow more money to fund that effort to make sure our military are well equipped to the best possible degree because we certainly are going to support them. And I think everybody is going to do that. But for the other spending, let us not do business as usual. Let us start looking at the budget. Let us start prioritizing. Let us start slowing down the growth of a lot of government and let us start paying attention to a lot of fraud and abuse. In fact, just in Medicare alone, GAO estimates that in 1 year there is probably fraud that amounts to between $17 and $19 billion. And when you are spending somebody else's money, it is easy to waste some of that money. So there needs to be the kind of pressure that this body can put on the different bureaucracies to make them look very carefully at how they are spending that money and reduce some of that wasteful spending.

Mr. SMITH of Michigan. Mr. Speaker, let me give you an example of a young married couple that have two kids in my congressional district in Michigan. And they were working. They had one job. The husband decided to provide more money for the family. He would go and take at least a half shift for a second job. And so he was upset when he learned that not only does he have to pay more taxes, but under our Tax Code, he was shoved for that additional earning into a higher tax bracket. So we said, look, if you are going to go out and get a second job and earn more money, not only do you have to pay the taxes, the increased taxes because of increased earnings, but we are going to tax you more because you went out and worked harder to do that second job to have more income. So we have a Tax Code that in many ways discourages what made this country great. And, of course, our Founding Fathers, I agree with the gentleman, would be very upset because we have a Constitution and a Bill of Rights that in effect says that those people that use that learning, that try, that work hard, that save and invest end up better off than those that do not. And what we have been slipping into for the last 30 years is a more socialistic system where we say if you go out and work harder and save and invest and try and earn more money, we are going to really hit you with high taxes because after all, we need to give, we need to give some of this money to people that need it more, that maybe are unlucky, that maybe did not save and invest. But our system has worked very well not because we are stronger or smarter. It is because we have had the incentive that those that really make the effort and try and invest and save and learn and use that education end off better than those that do not. And so to change that around and say, look, if you are going to be successful, we are going to punish you more, is not what is going to keep us the strongest economy in the world.

Mr. SMITH of Michigan. Because, Mr. Speaker, it is tempting for politicians to come up with more programs, to have more pork barrel projects because the news media puts them on the front page, the television covers them cutting the ribbon for the new jogging trail. So what has happened is you increase the probability that you are going to get reelected if you come up with new programs to help someone with their problems. And once you start spending, if you spend that money for a certain project or a certain arena for a couple of years, it almost becomes an entitlement because they develop the interest and they hire a lobbyist that starts saying, boy, we are really going to scold you if you decide not to continue our funding. Mr. Speaker, I would like to thank the gentleman from Maryland (Mr. Bartlett) for joining me tonight in this Special Order. And I would like to begin with some of my particular concerns on the war on Iraq and, of course, the 48 hours are up now; and that means in the next several days I presume there is going to be a more military aggressive insistence that Saddam Hussein gives up those weapons of mass destruction. Let me start out by saying that Bonnie, my wife, and I will be remembering our troops every night in our prayers and I hope, Mr. Speaker, that everybody in America does the same. These are the best soldiers in the world. They are courageous defenders of our freedom and worthy representatives of the United States of America. I think it has been regrettable that some countries that have traditionally been U.S. allies have not been able to join our coalition to rid Saddam Hussein of devastating weapons. I am told that I cannot swear on the floor of the House, but I am as mad as Hades about France's actions. France, which the U.S. liberated in World War II, has gone as far as to use its veto to block any U.N. approval of any resolution to support the coalition that would have insisted on the disarmament of Iraq. I think this is unfortunate because they have resulted in putting our young men and women soldiers at risk. We should not be under any illusion that France is acting on its, at least in part, narrow self-interest. The French want a prominent role on the world stage, and they seem to delight in cutting down the United States. But even more importantly, they want to defend some of their profitable extensive contracts and trade relationships that they have bargained with Saddam Hussein and Iraq. Let me list a few of those interests. According to the CIA World Fact Book, France produces over 22.5 percent of Iraq's imports. In 2001 France became Iraq's largest European trading partner. Roughly 60 French companies do an estimated $1.5 billion in trade with Bagdad annually under the U.N. Oil for Food Program. France's largest oil company, Total Fina Elf, has negotiated a deal to develop one of the world's major oil fields, the Majnoon field, in western Iraq. The Majnoon field purportedly contains up to 30 billion barrels of oil. Total Fina Elf also negotiated a deal for future oil explorations in Iraq's Nahr Umar field. Both the Majnoon and Nahr Umar fields are estimated to contain as much as 25 percent of Iraq's oil reserves. France's Alcatel Company, a major telecom firm, is negotiating a $76 million contract to rehabilitate Iraq's telephone system. From 1981 to the year 2001, according to the Stockholm International Peace Research Institute, France was responsible for over 13 percent of Iraq's arms imports. Selling military equipment and arms to Iraq. And this is not a new position for France. It has consistently blocked attempts to bring Iraq into account since the Gulf War in 1991. In 1995, when there was an effort in the U.N. Security Council finding Saddam in material breach, France opposed it. In 1996, when there was an effort to pass a resolution condemning Saddam Hussein for his slaughter of the Kurds, France opposed it. In 1997, when there was an effort to block travel by Saddam's intelligence and military officials, France opposed it. In 1998, France announced that Iraq was free of all weapons of mass destruction, something that nobody believed and France does not believe today. In 1999, of course, they opposed the creation of UNMOVIC, the existing inspection regime that they now want to say is where we should go and just let them keep going and keep looking. Of course last month, they vowed to veto any resolution authorizing force to disarm Iraq of weapons of mass destruction. Let me say again. France's opposition to the U.N. resolution sought by the President and Prime Minister Tony Blair appears to have been based somewhat on business considerations. Saddam Hussein, no matter what he has done to his own people, no matter what threat he poses to his neighbors or the world, has been someone France has been able to do business with, and France has certainly not been the only country. But one of our dignitaries suggested that France has sort of acted over the last dozen of so years like the legal counsel for Saddam Hussein. So I am concerned about their motivation. Here again, there are other countries. We can see that both Germany and Russia have extensive dealings with Iraq that call their motives into question, as far as I am concerned. In Germany's case, direct trade between Germany and Iraq amounts to about $350 million every year, and another $1 billion is reportedly sold through third parties. It has recently been reported that Saddam Hussein has ordered Iraqi domestic businesses to show preference to German companies as a reward for Germany's firm positive stand in rejecting the launching of a military attack against Iraq. It was also reported that over 101 German companies were present at the Baghdad annual exposition. During the 35th annual Baghdad International Fair just 4 months ago, a German company signed a contract for $80 million for 5,000 cars and spare parts. In 2002, DaimlerChrysler was awarded over $13 million in contracts for German trucks and also spare parts. German officials are investigating a German corporation accused of illegally channeling weapons to Iraq via Jordan. The equipment in question is used for boring the barrels of large cannons and is allegedly intended for Saddam Hussein's Al Fao supercannon project. Russia, too, has extensive dealings with Iraq that it wants to protect. For example, according to the CIA World Factbook, Russia controls roughly 5.8 percent of Iraq's annual imports. Under the U.N. oil for food program, Russia's total trade with Iraq was somewhere between $530 million and $1 billion for the 6 months ending in December 2001. According to the Russian Ambassador to Iraq, Vladimir Titorenko, new contracts worth another $200 million under the U.N. oil for food program are to be signed over in the next 3 months. Soviet-era debt, someplace between $7- and $9-billion was generated by arms sales to Iraq during the 1980 to 1988 Iran-Iraq war. Our soldiers will have to face many of these weapons on the battlefield in the coming days. Russia's LUKoil negotiated a $4 billion, 23-year contract in 1997 to rehabilitate the 15-billion-barrel West Qurna field in southern Iraq. Work on the oilfield was expected to commence upon cancellation of U.N. sanctions on Iraq. The deal is currently on hold, obviously. In October of 2001, Salvneft, a Russian-Belarus company, negotiated a $52 million service contract to drill at the Tuba field in southern Iraq. In April of 2001, a Russian company received a service contract to drill in the Saddam, Kirkuk, and Bai Hassan fields to rehabilitate the fields and reduce water incursion. A future $40 billion Iraqi-Russian economic agreement, reportedly signed in 2002, would allow for extensive oil exploration opportunities throughout western Iraq. The proposal calls for 67 new projects over a 10-year time frame to explore and further develop fields in southern Iraq and the Western Desert, including the Suba, Luhais and the West Qurna and Rumaila projects. Additional projects added to the deal include second phase construction of a pipeline running from southern to northern Iraq, and extensive drilling and gas projects. Work on these projects would commence on cancellation of sanctions. One Russian company over the past few years has signed contracts worth $18 million to repair gas stations in Iraq. The former Soviet Union was the premier supplier of Iraqi arms. From 1981 to 2001, Russia supplied Iraq with 50 percent of its arms. It is important, Mr. Speaker, for us to understand who our friends are in the world and how they make their decisions. The negotiations over this U.N. resolution has been, I think, a certain lesson on this topic. It is one that will not easily or not quickly, I hope, be forgotten. The challenges ahead of us are great, but make no mistake. If Saddam Hussein were to succeed in developing, in keeping these weapons of mass destruction, the chemical weapons, the biologic catastrophes that could come from the biological weapons and certainly his efforts over the years to try to develop atomic weapons, if that were to be let go undone, it would be tremendously difficult to deal with the other problems that the free world is facing in Iran, in North Korea, let alone the rogue nations with tyrants as dictators that might decide, well, Iraq got away with it and they were able to do great bargaining for themselves. If we develop these weapons, then we are going to be in better shape to threaten, coerce, blackmail, if you will, for better deals for our country. The challenge ahead is great. The technology and the ability of many of these countries to develop these kind of devastating weapons is now available, almost on the Internet. So I think today it is so important that we strongly support our military troops, that we thank the 30 to 50 countries that have decided, according to Secretary Powell, to support us in this effort. Maybe this is the beginning, but the United States has taken on this responsibility. In past actions through World War I, World War II, all of our wars, the Korean War, even Vietnam, they were all for good humanitarian reasons, to make sure that freedom and justice and the rights of people were helped throughout the world. That is part of what we are going to be going after in the next few days, to try to make sure that not only these weapons in Iraq are disassembled and destroyed, but that we keep other countries from making the same effort and having the same threat on our liberty and freedom.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, with this early session today it seemed like an appropriate time to talk about what I think are maybe three of the greatest problems that we are facing in the United States Congress in America outside of our economic security and our physical security with the wars going on in Iraq, with the challenge from the terrorists around the world. However, the financial problems that we are facing in Congress are also very serious, and I think we must reverse the rapid descent that we have been taking into extra deficits and overspending. So today I will talk about three areas: One, spending; two, the resulting debt; and, three, some of the financial challenges that face this Nation in the future. The first chart I have is the a chart representing the last 10 years of spending; and discretionary spending has increased an average of 6.3 percent, 6.3 percent each year since 1996, and 7.7 percent each year since 1999. So it is somewhat flat. It starts going up in 1996 and then it really takes off from 1998, 1999 averaging 7.7 percent a year. That is two, three, depending on the year, sometimes almost four times the rate of inflation. So you can imagine if you project that on in this kind of growths of costs, government is going to be eating up more of our income, more of our gross domestic product in the years ahead. Why is this? How can we control ourselves from the overzealousness and the attractiveness to spend more money? Of course, politicians in this Chamber get elected every 2 years. The politicians in the other Chamber get elected every 6 years, and the tendency has been when a Member of Congress takes home more pork barrel projects, when they are doing something to solve some of the problems that we face in this country, then they get on television. They get on the front page of the paper. They become popular, especially with those people that need those services, and there is a greater propensity that they are going to get reelected. So the tendency has been to spend more and more money, and we have changed our income tax system so that most of the people in the United States do not pay much of any income tax. It is the top 14 percent of taxpayers that pay something like 90 percent of the total income tax, and the bottom 50 percent of income taxpayers only pay about 1 percent of the income tax. So it is easy to understand that that bottom 50 percent is not outraged by increased taxes and increased spending and increased borrowing, and this is the next issue I wanted to talk about is borrowing. Three years ago, in the year 2000, we had a budget surplus of $236 billion. This year we are approaching a $500 billion deficit. So over $700 billion changed from surplus to deficit in a total Federal spending budget that we are looking at this year of $2.1 to $2.2 trillion. Huge points, and again, that is because of the overzealousness to spend. Let us look at what has happened as a result of that spending, and I think it is good to remind ourselves of the definitions. When we say ``deficit'' that means a year in which we are spending more money than the Federal Government has in revenues coming into the Federal Government, and ``debt'' is the accumulation of that annual overspending. So what does government do? We borrow more money. As a safeguard to try to hold the line on borrowing, what we did many, many years ago is said, look, we cannot borrow, in fact, the Constitution prescribes it, we cannot borrow any extra indebtedness for this country unless it is a law passed by the Senate, the House and signed by the President, to try to put some restraints on the temptation to simply borrow more and more money and spend more and more of that money, and of course, this chart is an explanation, as best as we could portray it, in a blue line, a green line and a purple line, if you will, on the gross Federal debt and its components. As we look at the bottom purple line, this is the debt held by government accounts. It is the money that we ask workers in this country to pay into the FICA tax, into the Social Security tax, designed in 1934, to be a forced saving so that while we are working, some of that money is taken out. FDR, Franklin Delano Roosevelt, said instead of having to go over the hill to the poor house, we are going to have mandatory savings during those years when a person is working, and then when they retire they will have more security, more Social Security. They will not have to go over the hill to the poor house. So we came up with a Social Security system, and when we started, it was a situation where current workers paid in their taxes to pay for the benefit of current retirees. That is the same today. Also, the extra money that is paid in by all Federal workers for their retirement programs, the money for the pensions of the military, our armed service members who pay in part of their wages for their retirement, that is all accounts held by the government, and what we assume in this Chamber, in the Senate and the White House, is that it is okay simply to write out an IOU and spend that money for other government services, but it technically is part of the debt, and as we see over the years, this debt held by government services continues to go up, at least past into the future, as far as we can see almost. The green line in the middle is the debt held by the public, the Treasury auctions that we have, the so-called Wall Street debt, the debt that is held by retirement funds, insurance companies, banks, anybody that wants to buy those Treasury bills. That is the debt that is held by the public. We saw a period in 2001 and 2002 and 1999 where we were having a little surplus in terms of paying down some of that debt held by the public, and so, to me, I think it was a little bit misleading, maybe a little bit of hoodwinking in terms of telling people we were paying down the Federal debt at a time when actually the total debt of the country continued to go up. The total debt never went down during our brag sessions of having a lock box, that we are going to take and pay down the public debt of this country. Yet what was happening is we were to pay down that debt, we were taking extra money coming in from Social Security and the other trust funds and using that money to pay down some of the public debt. So, therefore, as my colleagues can see and as we have tried to portray by this chart, the debt has never really decreased. Why is this bad policy? Why is it unfair to our kids and our grandkids and future generations to keep piling up this debt? If we will, sort of pretending that our debt and our problems today are greater than maybe the needs of our kids and our grandkids, probably not so. They are going to have to somehow come up with the extra tax effort to pay off this debt but absolutely to pay the cost of servicing this debt. Right now we have got a downturn and a sluggish economy, and so, therefore, there are less revenues coming in. The demand for extra money is not out there in the private sector, and so the effect of extra government borrowing does not hurt the economy so much, but when it is going to start to hurt is when we have this economic recovery. When individuals say it is time, I want to buy a new car, what is the interest rate; it is time I want to buy my house and my home for my family, how much is it going to cost me; and a business that decides to employ more and expand and buy the equipment and the facilities they need for expansion and business, and then they find out that who is at that marketplace, buying up available money, is the Federal Government. The Department of Treasury has auctions every week, and based on the total indebtedness and how much extra we are spending over and above what is being brought into the Federal Government, it is a situation where government says, well, look, whatever it costs we are going to have our money. If we have to bid up the interest rate to make sure that we get the money we need, we are going to do that, and of course that results in the potential for higher interest rates and that is what is going to happen. When the economy recovers, interest rates are going to go up. Interest rates right now are a little over 3 percent. So government can borrow money at about 3 percent, and yet even with that low interest rate, the servicing that debt, the interest that government pays on that borrowing represents 11.4 percent of our total Federal spending budget. What would happen if we hit interest rates that were in existence in the late seventies and early eighties when we saw interest rates go as high as 17 percent, sometimes higher than 17 percent? Then that 11.4 percent becomes five times greater, and 60 percent of our budget would be used paying interest, and that is just the situation with the current debt today. What if we project ourselves to the debt that is going to happen if we are not able to have the intestinal fortitude, if you will the guts, to stand up and say no, we are going to slow down spending, we are going to prioritize some of the Federal spending, government cannot be responsible to all of the problems of the country and we go back to the basics of our United States Constitution? When Republicans took the majority in this Chamber in 1994 and starting in 1995, Newt Gingrich, the then Speaker of the House, asked me if I would be chairman of the Debt Limit Task Force, and so we got what I considered some of the really good thinkers in terms of trying to come together to analyze how do we start having a balanced budget, how do we start living within our means, how do we start convincing Members of Congress and the country that government cannot solve all the problems and that it is unconscionable just to keep spending more and more money, and of course, politically it is not wise to increase taxes to cover those expenditures, because people reach in and they feel their billfold and they feel the money going out of that billfold to pay the income tax but not so with borrowing. So the tendency has been to increase more and more borrowing. What if interest rates, and they will, what if interest rates simply are forced up by 2 percent because of the extra demand that government has for borrowing? A person goes out and buys a $28,000 car and they amortize it over 5 years, pay it off in 5 years, it is going to cost them $3,000 more to buy that vehicle because government has pushed up interest rates in the marketplace. What if they want a home, what if they are going to go out and buy an $80,000 to $100,000 home, amortized, let us say, over 25 years? Then they are going to end up paying $13- or $14,000 more for that home because government is in the marketplace bidding for available funds and driving up the bid on what that interest rate is going to be. So it is going to affect each one of us individually eventually if we are not able to hold the line on spending. Our debt today amounts to about $24,000 per individual in this country. The total debt is $6.4 trillion. Let me tell my colleagues another safeguard that our task force on holding the line on debt did. We said that there was a rule in this House, it was called the Gephardt rule, and the Gephardt rule stated in the rules of this Chamber that every time we passed a budget, if that budget spent more money than what was coming in in revenues, then automatically, without another vote, the debt limit of this country would be raised in legislation that would automatically be passed and sent on to the Senate. Why was that? That was so this Chamber was not embarrassed by having to take a vote and a debate on should we increase the debt for our kids and our grandkids. I am a farmer from Michigan, and it has been our goal to pay off the mortgage, to give our kids a little better chance, but that is not what we are doing in this Chamber. That is not what we are doing across the hall at the Senate. It is not what we are doing at the White House. We are saying our problems must be so great that it justifies us making the wages and earnings of our kids and our grandkids and our great- grandkids to pay off that debt. That is sort of the spending part of the problem on debt. Another task force that I have been chairing is a bipartisan task force made up of Republicans that sit on this side of the aisle, Democrats that sit on that side. So it was a task force on Social Security, and after we studied the problem and challenge of Social Security, we pretty much all agreed, Democrats and Republicans, that something has to be done because Social Security is going broke, and just let me review a couple of charts that I have on why Social Security is going to grow. The coming Social Security crisis, and it is coming very quickly, our pay-as-you-go retirement system will not meet the challenge of demographic change. Pay-as-you-go is back to where it was. It is the same as when it started in 1934, existing workers pay in their Social Security tax. That money immediately goes out to current or existing retirees. So there is no savings account. Nothing is being saved up for your retirement. It is simply a situation where whenever there were not enough workers and enough revenue coming in for the Social Security to cover promised benefits, then what did government do? And I am sure you can guess what government did. They either raised the tax, Social Security tax, and/or they cut benefits. And most often, throughout the years since 1934, they have done both, raised taxes and cut benefits. That is why when we looked at the chart on how much debt held by the government accounts kept going up, it is because in 1983, on Social Security, the Greenspan Commission raised taxes so high that ever since that law was enacted, there has been more money coming in to Social Security than was needed to pay out Social Security benefits. And like I said, government said, this is a good deal. We are going to take this money, write an IOU, and we are going to use the Social Security money to pay for other government programs. That is why some of us said, look, we need something. We need private accounts. We need some way to get it out of the hands of spenders in Congress that would like to take that extra money and instead of saving it, somehow investing it. Every year, Congress has simply spent that money. So what is in the Social Security trust fund? It is a nice name, but it is a misnomer because there is no real trust fund. There is no money there. So young people are at risk of trying to figure out ways on how they are going to do maybe without Social Security, or with much less Social Security; but more importantly, during their working life, they are going to probably be asked to pay more towards current benefits of retirees. Look at this chart a minute with me. Demographics is the word. That is the problem. When we started this pay-as-you-go program, it worked very well. The working population was growing in relation to the number of retirees. In fact, back when we started the program, there were 36 workers working, paying in their taxes, for every one retiree. By 1940, it got down to 24 workers working, paying in their taxes, for every retiree. By the year 2000, three workers. Three workers paying in their taxes for every retiree. So their taxes, of course, had to go up. And what the actuaries at the Social Security Administration are predicting is that by 2025 there are only going to be two workers for every one retiree in this country. And why is that? That is the demographics. The baby boomers. The increase in the birthrate has always been sufficient to keep an increased number of workers in relation to retirees. But now, after the baby boomers, those born after World War II, and the big increase in workers in this country, we are seeing a reduced birthrate; and at the same time we are seeing older people living longer. So where the average age of death when we started this program was 62 years old, which meant most people never got to 65 and collected Social Security benefits, now the average age of death is 86 years old, and it is going up. Let me conclude by pointing out what we know about Social Security. Insolvency is certain. We know how many people there are, and we know when they are going to retire. We know that people will live longer in retirement. We know how much they will pay in and how much they will take out, and we know the results. The fact is payroll taxes will not cover benefits starting in 2015 and that the shortfalls will add up to, and listen to this, $120 trillion between 2015 and 2075. Our annual budget is only $2.1 trillion; but over those years, in excess of the tax money from Social Security coming in, we are going to need an additional $120 trillion. That is why it is so important that we deal with this; that we step up to the plate; that we deal with this problem now instead of putting it off. Because we have a surplus now coming in from Social Security. If we can use that surplus, it is going to help. The bipartisan task force on Social Security came to the conclusion that there has to be a better investment for that extra Social Security revenue coming in to the Federal Government. Private accounts are good, for a twofold reason. One, you take it out of the hands and you get it off the table in terms of having it available to be spent by Congress. So it is an assurance that that money is in the name of the American worker and they can depend on it. If they happen to die before age 65, then it goes into their estate. Now, some have argued, well, we cannot let the individual decide how to invest that money. I say if it is a compromise, fine, let us do it the same as the government's Thrift Savings Plan, where there is a government manager with indexed funds and that you have the choice of some of those safe index funds and you invest in that variety of funds as you might choose. But, still, it is government saying these are the safe funds where you are going to be least likely to lose any of that money. And so somehow it is a good idea. Because let me tell you, the Supreme Court, on two occasions now, has said that there is no entitlement to Social Security money. I mean, if you work all your life, you pay in all those Social Security taxes, the Supreme Court, on a couple of cases, has said, look, Social Security tax, the FICA tax, is simply a tax and your entitlement to get benefits is simply legislation that has been passed by Congress and signed by the President. In conclusion, let me say that the biggest risk is doing nothing at all; to do nothing to set aside the Social Security trust fund money and to not use it. And the lockbox that we heard about 3 years ago was a farce. It did not do anything to save Social Security. It was just sort of rhetoric that became politically popular. That money really needs to be invested in some fashion, in such a way to make sure that it is not available to the rest of government to spend as they might choose in other areas. Social Security has a total unfunded liability of over $9 trillion. Now, the $9 trillion is what we need to come up with today if we are going to keep Social Security solvent. The $120 trillion that I mentioned is future-years money with inflation, et cetera. So between the years 2015 and 2075 we are going to need that extra $120 trillion over and above the Social Security tax that is coming in from payroll. And I need to mention that right now 75 percent of American workers pay more in the FICA tax, the payroll tax, than they do in the income tax. And it would be, I think, extremely unfair to increase that tax again. Over the years, we have done it dozens of times. It started out at 1.5 percent tax on your income, and that included the employer's share; and now it is up to 12.4 percent. The Social Security trust funds contain nothing but IOUs. So if we do nothing, somehow government is going to have to raise taxes someplace or increase borrowing or cut down on other government expenses to accommodate what we promised in Social Security. To keep paying promised Social Security benefits, the payroll tax will have to be increased by nearly 50 percent or benefits will have to be cut by 30 percent. Too much. It would be bad. It would be terrible. With so many seniors that depend on Social Security for over 90 percent of their total income in their old age, it would be inconceivable to make those kinds of cuts. So I ask my colleagues, Madam Speaker, to stand up to this great challenge. Even in the midst of the tremendous challenges that we have with the terrorists, the challenge of what we do with Saddam Hussein in Iraq, we have to stand up and make some hard decisions to make sure that we save Social Security and we do not keep putting it off until it becomes a crisis. And that crisis is rapidly approaching, because sometime between the year 2015 and 2017 there is not going to be enough money coming in from the Social Security tax to pay benefits. So back to my three areas that I thought were very important. One is spending. We cannot continue to spend. And there will be a lot of criticism on this budget that came out, because we are cutting back on spending. For the first time since I have been here, and I came in in 1993, the budget resolution that we are going to be looking at over the next couple of weeks actually says in the discretionary part of spending, which represents less than half of the total spending, but in some discretionary spending, in some entitlement spending we are going to have to cut back because we want to hold the total spending of this Congress down. And you know what I think? I think even a lot of grandpas and grandmas, if they knew that it just meant extra borrowing to accommodate some of their needs, even to the extent of prescription drugs, they would say, look, if it is going to be borrowing that my grandkids have to pay back, hold off a little while. Try to hold the line on spending, because that is going to result in holding the line on the total debt that we are passing on to our grandkids.

Mr. SMITH of Michigan. I yield to the gentleman from Florida.