Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, we are in a predicament in Congress right now, and that is finishing the appropriations bills. The appropriations process goes from fiscal year to fiscal year, that is, October 1 to October 1. So in just another week we are hitting the new fiscal year. So tomorrow, what we are going to do is pass what is referred to as a CR; it stands for a ``continuing resolution.'' We are now sort of arguing and trying to decide whether continuing spending for the next few weeks should be at the level it was this current fiscal year or whether it should be increased somewhat in terms of spending to accommodate inflation. The problem is that there are a lot of people in Congress, in the House and in the Senate, that want to spend more money. So what has happened in this Congress, in this government, is spending has been going up faster than inflation. I brought this chart and made up this chart quickly, and we can see how the spending line tremendously has increased over the past 5 or 6 years in terms of spending. Spending has some consequences in terms of its effect on the economy. The Republican Policy Committee met with Art Laffer, who I consider a very good economist in this country. We met last week. One of my questions to Art was, What is worse as far as its negative effect on economic growth, would it be increasing the debt or having tax increases? He said, in his opinion, they are both about the same kind of negative effect. Tax increases maybe have a greater economic effect in the short run; but in the long run, increasing the debt, that means we are going to take a lot of money out of circulation which, eventually, has just a negative effect on the economy. A lot of people are saying, well, look, we should be paying more attention to the economy. One way this Congress can pay more attention to allowing the economy to operate the way it should is be a little less overzealous in terms of regulation on business, in terms of our taxes on individuals and business, and when I say taxes on individuals, most of the businesses, the small businesses in the United States pay that individual income tax. So as we become more intrusive in that tax, it has a tendency of discouraging small economic growth, which is really the backbone, the mainstay of employment in the United States. That brings to mind a question I think that this body must deal with and must consider, and that is how big should the government be in terms of a percentage maybe of gross domestic product. How fast should expenditures rise? Is it reasonable to have the budget of the Federal Government increase three and four times as fast as inflation increases? And the conclusion is, as we are concerned about the economy, the answer is no, that we should hold the line on spending so we do not have to increase taxes and so we do not have to increase the Federal debt. Politicians have found out, however, that it ends up being to their advantage politically, it increases their chances of being reelected, if they spend more money, so they go home with more pork barrel projects; and they get on television and in the newspaper cutting the ribbon for the new pork that they brought home to their district, or they come up with more social programs to help relieve some problem in the United States. No one can say there are not a lot of problems, no one can say that the spending in the Federal Government probably does not do some good for somebody, but the tendency has been to expand government spending. Tonight I want to talk a little bit about the ramifications of increasing our public debt. What is the public debt? We have heard people brag that we have paid down part of the debt to the public in the last few years. The fact is that the total debt of the Federal Government has continued to increase every year. The debt can be divided into two portions. It is the Wall Street debt, the amount of money that we borrow from individuals that are at weekly Treasury auctions, and it is the money that we borrow from the trust funds, Social Security being the biggest one. So the money coming in from Social Security when we were pretty overzealous in the amount of increase in the Social Security taxes that we passed in 1983. We now are bringing in from that FICA tax, that 12.4 percent that we charge on everybody's wages for Social Security, we are bringing in $515 billion a year. Out of that $515 billion, this current year, in Social Security benefits, it is immediately sent out, that is, it comes in one week and it is out the next; and Social Security benefits are costing $452 billion, so there is a little extra money. What we did for a couple of years when we had the balanced budget, when the budget balanced, we used that little extra money to pay down some of the debt held by the public. But since we were borrowing that money from Social Security to pay down another debt, it is sort of like using one credit card to pay down some of the debt of another credit card; the total debt, the total obligation of this country continued to increase. The tendency has been to have government grow much faster than inflation, and if we project that increase out over several years, it is going to result in government getting way too big. Let me review a couple of the statistics. In 2001, the debt as a percentage of GDP, gross domestic product, was 33.1 percent, in 2002 it was 33.9 percent, and the projection for 2003 is 34.1 percent. So the Federal debt, even in terms of a percentage of our economy in this country, is growing. That means that we are leaving less money in the pockets of the American worker, the people who earned that money. Somehow, Congress is convincing more and more people that it must be good for them if we are coming up with more social programs, if we are coming up with more government programs to help them out, but the fact is that it is tremendously inefficient taking money away from my home State of Michigan or your home State of wherever, bringing it to Washington, running it through this bureaucracy, this political maze, and then what is left we send back to help out some social program of people that need help. When I am asked what projects or programs would I cut, it is difficult, because that is the predicament Congress now finds itself in, is arguing how big the appropriations bills should be. An election is coming up November 5, and the big spenders are going to criticize those who want to put a lid on spending and try to spend not more than what the President has recommended; they are going to go back to some of those special interests and say, well, look, those guys on that side of the aisle, probably it is the Democrats saying the Republicans, did not want to give you any more money for your very good project. So politics has come into the picture in terms of trying to get a handle on spending. Like I said earlier, most Members of Congress that come up with more pork barrel spending, that come up with more programs to help out some problem some place, probably have a greater tendency to be reelected. So there is really a lesser of a safeguard on increased spending than there should be. Here is another problem that we have developed as far as the progressivity of our tax system. Right now, 50 percent of Federal Government benefits go to individuals that pay less than 1 percent of the Federal income tax. So here is 50 percent of the people that are getting a lot of benefits for a little effort in terms of the percentage of the income tax that they pay; and so there are a lot of people in this country who say, well, a little bigger government, a few more programs that might help me would not be all that bad. That is the contest that we are running into as far as the Federal Government. Mr. Speaker, a few weeks ago, we went up to the Federal Hall in New York City, the first time in over 200 years that Congress has moved a session of this body or the Senate out of the location of Washington, D.C. We met at Federal Hall where the Bill of Rights was passed; in 1789 where the first Congress met, where they passed the Bill of Rights, where George Washington was sworn in as our first President. It is my guess as I review the Constitution that our forefathers felt that government should be minimal, that mostly what was passed into law should be at the State level and not the Federal level, so there was some very precise language limiting what the Federal Government could do. We have sort of circumvented that effort, and we have passed more laws and more bills as we have claimed that more and more things are really involved in interstate commerce and, therefore, are a proper role of the Federal Government. Let me review for my colleagues the interest on the Federal debt. The interest on the Federal debt is becoming one of our largest expenditures. The interest on the Federal debt this year is $331 billion. In 2012 the projection is that the interest on the Federal debt is going to be $513 billion. The problem I think that bothers me and maybe the gentleman from Maryland (Mr. Bartlett) the most is the hoodwinking of the American people in confusing the American people about what the Federal debt really is. So as we talk and brag sometimes about the fact that we are paying down the debt, this chart represents the total Federal debt. It represents the fact that the total Federal debt, that what we owe, whether we owe it to Social Security, we have to pay it back; or whether we owe it to somebody that bought a bond on the weekly market of Treasury, it is a debt and obligation of this country. Even more than this, we do not discuss unfunded liabilities. Mr. Speaker, I yield to my colleague, the gentleman from Maryland (Mr. Bartlett), for some comments on trying to be honest with what the Federal debt is.

Mr. SMITH of Michigan. In fact, if the gentleman will yield, that is what was decided: The only way we can increase the deficit is by increasing by congressional action the debt ceiling. So the idea was to make it difficult, and for us to have to think through, do we really want to increase the debt on our kids and our grandkids, to make them pay back what we think should be our standard of living now? Just how fast this has grown, when the gentleman from Maryland and I, we came into Congress the same year in 1993, and at that time the Federal debt was $4 trillion. Today, the Federal debt is $6.2 trillion, almost a 50 percent increase. Ten years from now, the Congressional Budget Office estimates that the way we are going by covering some of these overexpenditures with increased borrowing, it will increase by 50 percent again, and the debt will be $9 trillion. What do we do? How do we hold the line? We start out by being honest with the public, with the American people, on what this debt really is, and that it has a very negative effect on their lives, because here is government taking this money out of circulation. Here is money being bid up, if you will, whatever the bid is on interest rate, and saying, look, whatever the bid is, we will up it one because we have to have this money to satisfy the overzealous spending of Congress.

Mr. SMITH of Michigan. Mr. Speaker, it was Adam Smith, who I consider another great economist, that in trying to figure out what was prudent, what was the right thing to do fiscally in government, said, what is prudent in one's own personal life is the prudent thing to do as far as running government. In our personal lives, the gentleman from Maryland (Mr. Bartlett) and I are both sort of farmers, and the tradition in farming where we grew up was we tried to pay down the mortgage to give our kids a little better chance. We are doing just the opposite: We are adding more burden to our kids and grandkids, and jeopardizing their future because somehow we think our spending and our needs today must be greater than what their needs are going to be 20, 30, 40 years from now. That is ridiculous, it is not fair, and it is something that eventually the American people have to realize when they go to the ballot box this November or whatever November. Some of the questions they have to be asking their candidates are: How deep do you want to go in debt? How much taxes do you want to raise? How much are you going to increase government spending? So do not stand there and brag to me all of the things you are going to do for me with my money as it is filtered through the bureaucracy in Washington.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I am going to make some comments on the tariff on steel imports. Several companies in my congressional district, the Seventh Congressional District of Michigan, which is roughly the bottom center of Michigan, have come to me as steel users and said that they have got a huge problem. The steel suppliers are saying, We don't care about the contract. We're going to increase the cost of the steel and you have to pay us double what the contract was. The company says, Well, we can go to court. The steel suppliers say, Well, you can do that. We'll probably fight it in court for 3 years, but tomorrow we're not going to deliver the steel that you need to meet your contracts. What is the solution? President Bush approved the new tariffs on steel imports, I think, to help give the steel industry and our American steelworkers really a chance to make changes so they might compete in the long term. I suspect the President, who as a young man did the hard physical work in the oil fields, wanted to give a chance to save some of the jobs of the people that do the hard physical work in the steel industry. However, the high tariff restrictions on steel imports have turned out to be a mistake with a potential of losing more jobs than they save. The price of steel in the United States has risen since last March by 30 to 50 percent. In addition to the large price increases, there has been a reduction in the amount of steel available because of the reduced imports coming in. This has made it impossible for many steel- consuming industries to find the steel that they need on the one hand and they are obligated to pay this new higher price that means that in many cases they are actually losing money filling their particular contracts. Domestic steel producers have in many cases reneged on the long-term contracts now that the steel prices have leaped, with the result that the consuming industries have been forced to pay that higher price than the agreed-on prices or have been forced into the volatile spot market for steel. The President's action, I think, turns against what he said on free trade and on taxes. First, by definition, free trade implies that it is unencumbered by demands of third parties. When government imposes tariffs on products, it reduces the ease with which they come across borders, either way, back and forth. Second, tariffs are just taxes by another name. Steel tariffs raise the cost of buying products that contain steel, cars, refrigerators, for instance, just as raising the sales tax on those products would. So it means not only are they in trouble, but once they produce the goods to the extent that they are able to pass that increased price on, American consumers pay the cost of that higher tax or tariff. The new Bush tariff is expected to hike the cost of steel products by 6 to 8 percent in the first 12 months, and in our State of Michigan, Michigan citizens will be hit hardest. Here is why: One of the most basic propositions of economics is the inverse relationship between price and quantity demanded. When the price of some goods, steel in this case, rises, less of it is going to be demanded, and the result is fewer sales of products containing steel and fewer jobs are going to be available for those industries that use that steel, the steel user industry that are ultimately making those finished goods with steel. This harms the Michigan workers and it harms the American workers in a number of ways. First, some American producers lose out because they are now competing with foreign companies that have access to cheaper steel. So I have got some companies in my district that say, well, we are considering moving to Mexico, Canada or someplace else, because they are paying a much lower price for steel. They are paying the world market price, where here in the United States, because we restrict the availability of steel and held out, the competition, the foreign competition, if you will, are paying a much higher price. Their products then become relatively more expensive because the steel in them costs our American producers more. Second, many American firms have simply had trouble securing sufficient supplies of steel in quantities to keep the factory operating. I have had layoffs in my district because plants have closed for the lack of steel. The third point I would make: It gives American firms, I think, a powerful incentive to move production out of the United States to foreign plants where steel is available at the lower world market price. This is so they can compete and can survive as a company. So it is hard to blame them, if that is their only recourse to survive. So that is what we are being threatened with in Michigan, some of these companies moving out of the State, and that is what is happening in many other areas of the United States where steel users are faced with a problem. A couple of economists, Joseph Francois and Laura Baughman, working on behalf of the Consuming Industries Trade Action Coalition, have estimated the impact of the Bush tariffs on the American economy in terms of their economic benefits and costs. For instance, they found that every State in the Union will suffer net job losses as a result of the tariffs. Ironically, the biggest job losses will occur in the Steel Belt, states such as Pennsylvania, such as Michigan. For every steel job saved as a result of the tariff, eight jobs will be lost in all sectors of the economy. Another point: The steel-producing industry would save between 4,400 and 4,800 jobs at a cost of about $439,500 to $451,000 per steel job saved. Higher prices for steel products and related inefficiencies would decrease U.S. national income someplace around $500 million, at a time when policymakers are talking about ways to improve the U.S. economy. Again, back in my State of Michigan, Michigan will suffer from the negative consequences of tariffs, and these economists found that Michigan will lose more jobs in steel-related industries than every State in the Union, save California. Under the most conservative scenario, Mr. Speaker, Michigan will lose almost five jobs in steel- consuming industries for every one job that is saved in Michigan steel- producing industries. Here is the point: There are 57 workers employed in the steel-using companies, 57 workers employed in the steel-using companies, for every one worker that is employed in the steel-making industry. Steel-using industries account for more than 13 percent of gross domestic product. Steel-using industries account for more than 13 percent of GDP, where the steel industry accounts for only about one-half of 1 percent of GDP. So the result, thus, the steel tariff has threatened many more jobs than it has protected. The Bush administration, I think, has recognized some of the distress that the steel tariffs are causing, so it has issued rulings that exclude 727 products from the tariff. Of course, this has set off a frenzy of lobbying as some of the steel-using companies angle for exemptions. That is what is happening now. This causes distortions not only in the cost of foreign and domestic producers, but also in Michigan and the United States between competing domestic producers as well. The timing of the decision to impose the tariff is also a problem. Steel imports into the United States have been declining. Steel imports, after reaching a high of 4 million tons in August of 1998, had declined by 36 percent to 2.6 million tons in November of 2001. Moreover, the market share of foreign steel producers has fallen from 28 percent in 1998 to 21 percent in 2001. This made the imposition of the tariff less pressing, and maybe we could have gone along without it. The challenge has got to be on the steel industry, and I think on government as well, as we look at how can we help this industry without hurting so many other workers and so many other industries that are steel users. It has been argued that the real threat to most of the domestic steel industry is not foreign steel at all. Steel is manufactured in the United States at mini-mills and integrated steel mills. It is the integrated mills that are having the greatest difficulty in making a profit right now. Mini-mills are much more efficient at producing steel than the integrated steel mill and have a 25 percent cost advantage over producing steel than the integrated mills do. As a result of their cost advantage, mini-mills have increased their market share from 10 percent in the 1970s to about 50 percent today. Over the same time period, the share of imports in the United States market has increased by only 10 percent. Therefore, the real threat to the integrated steel mills are not imports, but our own American mini-mills. Finally, the steel tariff encourages retaliation from our trading partners. If you look at the European Commission, it is now threatening retaliatory tariffs of 100 percent on a 22-page list of goods ranging from rice to grapefruit to shoes to brassieres to nuts to bib overalls to billiard tables to ballpoint pens, and the list goes on. So retaliation could develop into the kind of price war that is going to hurt the United States a great deal. The Japanese, for example, are also drawing up their steel payback list. Steel-exporting Russia, looking for ways to retaliate, has said we are going to fence out the U.S. chickens that are coming into Russia. Even though Russia does not produce chickens, they need the chickens, but they are looking for ways to retaliate. Hopefully that issue is going to be resolved. Mr. Speaker, we can ask if the tariff has done that much for the steel industry. I would mention that I was going to mention that Florida is a significant steel-using state, but I see our Speaker has changed. But I will mention that steel-using industries are all over the United States. Over the past 30 years, the Federal Government has been implementing policies to keep the steel industry in business, despite its inefficiencies. These policies have included voluntary quotas and antidumping, and that is the thing that has got to continue. If some other country is dumping below the cost of production, then we are going to stop that kind of dumping. So that is going to take place and should take place, regardless of whether we lift the current restrictions on imports. The countervailing duty measures are another. Some of the companies have moved up and are now competitive, but much of the industry, instead of resulting in a stronger manufacturing efficiency, these policies are allowing companies to continue with production methods, with labor contracts, that keep it perpetually at the risk of dissolution and keep it out of reach of real competition with other mills in the United States and the international steel producers. Standard and Poor, for example, was not optimistic when the President announced the tariff restrictions on steel imports, and they responded to the tariffs by refusing to raise the industry's credit rating. The steel tariff has turned out to be a mistake that is harming many industries, both in my State of Michigan and across the country. It is having the result of losing American jobs. We need to repeal this kind of tariff restriction to allow our steel- using companies to again be competitive and keep those companies in the United States. We need to start reviewing the kind of overzealous regulations and overzealous taxation that we put on the steel industry. So let us look at the tax imposition that we put on our steel manufacturing industries compared to what other countries are doing with their steel manufacturing industries. We need to assist, I think, in research and technology. I am chair of the Subcommittee on Research in the Committee on Science. So we need to continue making sure that our research and our technology is available, and we can look at ways of expanding the technologies that are applicable to that industry to help allow these steel-producing industries to be more competitive in the international market. There are a lot of things we can do without challenging and disrupting the many workers in America that are working in the steel-using industry. Mr. Speaker, I would like to also make a couple comments on our spending and our budget. Right now we have got a challenge of where do we go on spending. We are in a war. We are going to be required to make sure that, to the greatest extent possible, we assure the safety of American citizens. We are probably going to waste a lot of effort, a lot of talent, a lot of money, and, in some cases, go further than we really would have needed to go in terms of protecting ourselves against terrorists. But the challenge, of course, for Members of Congress and for the President is making sure that we go far enough in our protections to have the greatest assurance possible. As we spend a tremendous amount of money in our war against terror, and that is approaching $90 billion now, I think we have got to remind ourselves that we are in a war and that some of the other traditional spending, some of the maybe less important spending, needs to be held only to a modest increase. Nobody is suggesting a cut in how we spend money, but we are suggesting that we hold the line and we hold tight to the President's budget suggestions so that discretionary spending is not going to continue to spiral, if you will, out of control. The 10-year spending history on discretionary spending has gone from a little over $500 billion to approaching someplace between $758 billion, is what the President has suggested for discretionary spending, compared to the Senate is now looking at $770 billion for discretionary spending. We hear some people suggest, ``Well, boy, you should not have had that tax cut. The tax cut is really what has caused all this problem in terms of the budget so that we do not have all this extra money.'' Let me just point out that the tax cut represents only 13 percent of the problem of overspending. We are looking at overspending this year that is going to approach $150 billion. Not good. We recently increased the debt limit; and I think when we do that, we need to make sure that someplace down the road we are going to be able to say to our kids and our grandkids that we are going to start paying this debt down again. We have paid about $500 billion down on the debt held by the public over the last half a dozen years. I mean, that is good news. That was good. We said we were not going to spend the surplus coming in from Social Security; but now, with the war on terror, we started spending the surplus on Social Security again, and we have increased the allowable debt limit of this country. And it should be just somehow a strong message from every fiscally responsible individual in Congress and around the United States to say, hey, look, we are in a war, it is time that we held the line on increased spending in other areas. Let me give my colleagues some quick examples. We have 13 appropriations bills that handle the discretionary spending. The Labor- HHS-Education bill, under the House plan, spending would grow 60.5 percent since 1998. That is almost between five and six times the inflation rate. So with the problem of a tremendously progressive tax system, we are in a situation where, according to the Heritage Foundation, over 50 percent of the benefits from Federal spending go to individuals who collectively pay less than 1 percent of the income tax. So the old safeguard, if you are going to have more government spending, somebody has to pay for it, we have to now in our collective efforts divide the wealth and try to make sure that there is some good distribution, to make sure that people are not going to go hungry and have a home, and our welfare systems and our food systems and, at the same time, reducing the amount of tax that low-income people pay. We have redistributed wealth to the extent where most, the top 10 percent of taxpayers, pay approximately 90 percent of the total income taxes in this country. As we look at the challenges of where we go on spending, there are a lot of people in everybody's district that say, well, we would like you to spend a little more on this program or that program; and quite often, these individuals, and that represents maybe 50 percent of the constituency of many of us in Congress, are looking at a situation where it does not cost them very much in their income taxes, so their willingness to call for increased spending is at little or no cost to themselves. We have had a system from the founders of our country, and it was interesting that we went up to New York, the first time this Congress left session in Washington, D.C. in over 200 years and went to the Federal building up in New York where George Washington was first sworn in and where, in 1789, the first Congress presided and we passed the Bill of Rights. We have had a country that sort of has the motivation, the incentive that those that learn, that try, that save and invest end up better off than those that do not. I mean, that has been our motivation. As we keep trying to divide the wealth, where we lose that kind of motivation, we are going to lose some of the incentives that have caused such a great success, I think, in the American economy over the 226-odd years that we have been in existence. Let me briefly look at some of the other increases in spending, and these dramatic increases in spending have even been during a Republican majority for many of these years. The Interior spending, we are now looking at spending that is going to be 40 percent higher than 1998, or about a 7.1 percent average. So that is maybe 2\1/2\ times the rate of inflation that we have grown in the Interior spending. The Treasury and Postal spending has gone up 41 percent since 1998, an average of 7.2 percent per year increase in spending, much higher than inflation. I have another chart here, this is a so-called spending history; and discretionary spending growth will average at least 7.5 percent each year since we balanced the budget in 1998. So you see, since 1998 we have just really taken off. What we did was we balanced the budget, we said it is important to balance the budget, and then we have sort of extra money, so everybody came up with ideas of how we could spend that extra money. What it means is that it is going to be more difficult to face the challenges of a good Medicare program, a good Medicaid program, a solvent Social Security plan. I think it should be another incentive to this body and the body on the other side and the President to hold the line on less important spending as we face the war on terrorism. Veterans Affairs, HUD, International, it has grown 39 percent since 1998, an 8 percent increase per year. Commerce, Justice and State also has grown with an average of 29 percent, 29 percent since 1998. Defense, not including our extra money that we have spent on terror, has gone up 46 percent, almost four times the rate of inflation. Transportation, it has increased by 52 percent since 1998, 9 percent average per year increase. Agriculture has gone up 21 percent since 1998. My point is that we are spending a lot of money, and are we doing a proper job of prioritizing that spending? In some areas I think we are, because for example, we have had a 132 percent increase in education spending since 1996. In Health and Human Services, almost a 100 percent increase; in December, a 48 percent increase that does not include the extra money since last September 11, a year ago. In conclusion, Mr. Speaker, I call on my colleagues, I call on the President to hold the line on spending and resist some of the pressures coming in from all of these special interest lobbyists that are giving millions of dollars toward campaigns for this election on November 5, saying we want more money for our constituency, for our particular clients. And so often, a Member of Congress, when they come up with more spending and new programs, they end up back home cutting a ribbon on some project they have taken back to their district, they get on television and in the newspaper. So the tendency has been for a Member of Congress to increase their chances of being reelected if they spend more money and take more pork barrel projects home to their particular district. So, Mr. Speaker, it is going to take the President, number one, and it is going to take the American people, number two, to say, look, now is the time to hold the line on spending.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I am going to make some comments on the tariff on steel imports. President Bush approved the new tariffs on steel imports, I think to help give the steel industry and our American steelworkers a chance to make changes so that they might compete in the long term. I suspect the President, who as a young man did physical work in the oil fields, wanted to give a chance to save some of the jobs of the people that do the hard physical work in the steel industry. However, the high tariff restrictions on steel imports have turned out to be a mistake with a potential of losing more jobs than they save. The price of steel in the United States has risen since March by 30 to 50 percent. In addition to the large price increases, there has been a reduction in the amount of steel available. This has made it impossible for many steel-consuming industries to find sufficient supplies of steel. Domestic steel producers have in many cases reneged on long-term contracts now that the steel prices have leaped, with the result that the consuming industries have been forced to pay higher than agreed-on prices or have been forced into the volatile spot market for steel. This has harmed American workers in a number of ways. First, some American producers lose out because they are now competing with foreign companies that have access to cheaper steel. Their products become relatively more expensive because the steel in them costs our American producers more. Second, many American firms have had trouble securing supplies of steel sufficient in quantity to keep that factory operating. I have had layoffs in my district because plants have closed for lack of steel. Third, it gives American firms a powerful incentive to move production out of the United States to foreign plants where steel is available at the lower world market price. This is so that they can compete, so that they can survive as a company. There are 57 workers employed in steel-using companies for every one worker in the steel-making industry. Steel-using industries account for more than 13 percent of gross domestic product, while the steel industry accounts for about one half of 1 percent. Thus, the steel tariff has threatened many more jobs than it has protected. The Bush administration has recognized some of the distress that the steel tariffs are causing. It has issued rulings that exclude 727 products from the tariff. And, of course, this has set off a frenzy of lobbying as some of the steel-using companies angle for exemptions. This causes distortions not only in the price of domestic and foreign producers but between competing domestic producers as well. Finally, the steel tariff encourages retaliation from our trading partners. The European Commission is now threatening retaliatory tariffs of 100 percent on a 22-page list of goods ranging from rice to grapefruit to shoes, brassieres, nuts, bib overalls, billiard tables, ballpoint pens, et cetera. The Japanese are also drawing up their steel payback list. Steel-exporting Russia has already retaliated by fencing out U.S. chicken. Hopefully that is going to be resolved. We can ask if the tariff has done that much for the steel industry. Over the past 30 years, the Federal Government has been implementing policies to keep the steel industry in business despite its inefficiencies. These policies include voluntary quotas, antidumping, countervailing duty measures. Some of the companies have moved up and are now competitive, but much of the industry, instead of resulting in a stronger manufacturing efficiency, these policies have allowed companies to continue with production methods and labor contracts that keep it perpetually at the risk of dissolution. Standard and Poor, for example, did not seem optimistic with the President's decision and responded to the tariffs by refusing to raise the industry's credit ratings. The steel tariff has turned out to be a mistake that is harming many industries both in my State of Michigan and across the country. It is having the result of losing American jobs. We need to repeal this kind of tariff restriction to allow our steel-using companies to be competitive. We need to start reviewing the kind of overzealous regulations and overzealous taxation that we have put on our steel industry and we need to assist in research and technology to help allow them to be more competitive in an international market.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, all over the United States we are blessed with a wonderful sense of community, where neighbor helps neighbor. One important reason for this great blessing is the inspired guidance of our religious leaders. In my home state of Michigan, one of those leaders has been bringing God's word for over 30 years. The Rev. John A. Toth, of the First Presbyterian Church in Dimondale, has been a beacon of faith and prayer, of hope and service, and of charity and outreach to the less fortunate. His life's work has been devoted to the service of others-- his faith, his family, his community and his country. John has been supported in his ministry by his remarkable wife Joanne. Thanks to their work, Dimondale is a better place to live and raise a family. I am honored today to rise in recognition of the steadfast service and commitment of this fine American and a principled man of God, Reverend John A. Toth. Reverend Toth pastored the First Presbyterian Church in Dimondale, Michigan for 30 years and has been a positive and energetic force for the community outside of his ministry. He has served as precinct delegate, on the Eaton County Courthouse Square board, on the state Boundary Commission, village appeals board and Eaton County's Solid Waste Planning Commission. The fruits of his work know no bounds. For instance, what started as a church youth paper drive for camp scholarships developed into the Dimondale recycling center, which recycles over 1.8 million pounds of materials a year. On Sunday, September 15, 2002, Rev. Toth will give his last sermon as the church's minister and he will be honored for his hard work and dedication at a special dinner. John Toth's significant contribution to not only those his ministry touched, but also the entire State of Michigan, in no way goes unnoticed. I would like to express my sincere gratitude for the efforts of Rev. Toth to improve the lives of those around him. The people of Michigan are truly grateful for his service.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I remember speaking on the House floor the day after the attacks. I asked, ``will we forget? Will this sick, sinking feeling fade? Will we fail to follow through on these promises or will we demonstrate unfaltering resolve?'' I am proud to say, one year later, that the American people remain determined to fight the war on terror, and though the road ahead will continue to be hard, we will prevail. We should reflect for a moment on the lessons in the attacks. In my view, there are three. First, America has enemies who resent our freedom and way of life. These enemies are determined and are ignored at our peril. Second, the oceans do not provide as much protection as they did in the past. We have to be aware that threats can come from anywhere. Third, as with Pearl Harbor, first punches can be devastating. We must now allow ourselves to be taken by surprise again. Even though we have had a year to reflect since last September, it is still hard to comprehend the magnitude of the terrorist attacks and the historic turn of events that they triggered. In our 226-year history, America has never known an assault on our homeland such as that terrorist attack. As horrific and sickening as the attacks were, however, they brought out the best in us as Americans. They reminded us that despite all our differences, we are one--a united America. Not only a nation of unprecedented strength, but also a nation that exhibits great tolerance and respect for the rights of its citizens as well as those of other nations--a nation of unshaken spirit, a nation bound by our shared faith in the founding principles of liberty and freedom. America was best exemplified by the actions of our first responders in response to the attacks. On that warm autumn day, the New York City fireman became the symbol of American freedom and American bravery to millions around the world. I believe it is really the one silver lining that shines through the cloud of horror that surrounds 9/11. It is our job in Congress to honor those who protect us--our defense forces abroad and our first responders here in America--by fully providing the resources and guidance that they need. As President Bush said at the annual fire services dinner in Washington last spring. ``There is no substitute for the raw courage of the firefighter.'' And we must never forget those Americans who made the ultimate sacrifice in saving the lives of others on September 11.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, this week it is important to remember those who lost their lives during the attack on America last year, as well as all of our first responders, our medics, our military personnel, and the people that volunteered and tried to help. I think our Founding Fathers would be very proud of our new diligence in our quest to preserve liberty and freedom in this country. President Bush has designated September 11 of each year to be Patriot Day, and calls on all Americans to observe it appropriately. I urge my Michigan citizens and all Americans to spend some time thinking about what we need to do to protect our liberty and freedom, and to pray for the families of those that died in the terrorist attack in Pennsylvania, Washington and New York. This Wednesday marks the 1- year anniversary. Let us remember what our forefathers did, and what happened to us 1 year ago and our renewed vigor to make sure that we do what is important to sacrifice ourselves in the preservation of liberty and freedom.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, in my Seventh Congressional District of Michigan unemployment is going up. Some of the companies are closing. Several are moving to Mexico and other countries. In the past, the United States has been so advanced in our productivity and our efficiency that we could put heavy taxes on business and industry, and we could impose restrictive regulations, and still be competitive in the world market. That is no longer true, Mr. Speaker. The international community is now vying for our markets, our ways of producing, trying to be more productive and take away our business. That means that we have got to take another look at how we put our companies at a competitive disadvantage, the way we tax our business and industry more than what other countries are taxing theirs. We now have a situation where Democrats are suggesting that if we have any tax changes to have a faster economic recovery, they are going to use it politically, suggesting taxation to give benefits for just the rich. We need to look at the kind of taxes that will protect workers savings and are going to help this economy recover quicker.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, just a comment. I chair the Subcommittee on Science which has oversight of the U.S. Fire Administration and the first responders. The fact is that we need the experience of FEMA in this new Department of Homeland Security. I understand the arguments that it would be nice to keep them separate, but the fact is they are the most experienced body. They have the tools, they have the equipment, they have the experience. I think we are not going to diminish what they are doing now, but we are probably going to expand the capabilities of what they do in responding to natural disasters. The next amendment, I think, makes it clear that we have to keep FEMA together in this new Department of national security, and I trust that the gentleman making this first amendment is going to support that amendment, but I would say to my colleagues, vote against this amendment. The fact is, the Fire Administration, the fire responders, the first responders believe that it is important that they stay in FEMA and that FEMA be part of this new homeland security.

Mr. SMITH of Michigan. Mr. Chairman, the gentleman from Minnesota (Mr. Oberstar) is still arguing his first amendment maybe. If we break off part of FEMA and that part of FEMA gets the $3.5 billion that we are talking about for additional training, then we move the whole U.S. fire administration away and we move the rest of FEMA away from that kind of decision. I support the Young amendment, which would ensure that the Federal Emergency Management Agency's Office of National Preparedness is not broken off from the rest of FEMA and does not become part of the Under Secretary for Border Transportation and Security, but that it remains with FEMA, with the rest of FEMA as part of the Under Secretary for Emergency Preparedness and Response. I think we all agree that emergency preparedness response activities will provide a critical role in the new Department of Homeland Security and has properly been selected as one of the four primary functions of the Department. I am chairman of the Committee on Science, Subcommittee on Research, and a Member that is actively involved in the first responder activities overseeing the U.S. fire administration. All of the fire organization first responders think that FEMA should not be broken up, that the Young amendment should be passed; and I can tell my colleagues that there is no better agency to lead in this effort than FEMA. FEMA has the right personnel, the right resources and considerable experience demonstrating their ability to lead. For these reasons, I believe that it is extremely important that we should protect and even expand FEMA's leadership role in this area. Most important, in protecting this role is keeping FEMA responsible for the $3.5 billion first responder grant initiative that the President proposed in his budget this year. This is what the Young amendment does; and Mr. Chairman, let me emphasize that in the administrative policy that the President sent over today, they support the Young amendment. Unfortunately, with some political maneuvering from the Judiciary, it was mixed up in this, and I think the whole body should support the Young amendment, keeping FEMA together and keeping it active and keeping it organized and helping our first responders.

Mr. SMITH of Michigan. Mr. Chairman, we have a bill in the Committee on Science, the Subcommittee on Research. This bill that I introduced makes it very clear that the fire grant program is separate and distinct and the U.S. Fire Administration is still going to continue to administer that program separate from what might be broken off from FEMA.

Mr. SMITH of Michigan. Mr. Chairman, will the gentleman yield?

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, the Goss amendment means that we continue what has not worked for the last 41 years. One of the certifications that the President has to make is that Cuba is not providing technology that could be used to produce, develop, or deliver biological weapons, and the President could not even make this certification for the United States.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I move to strike the last word. Mr. Chairman, it is easy to say we should spend more money, but think for a moment of what is happening to American families. A lot of individuals around the United States are losing their jobs. Do you think they will be spending as usual? No, they are not. And all we are suggesting is simply to limit our increase in discretionary spending to inflation. We are not talking about cutting the interior budget or any other budget. If we could simply limit our spending to what the rest of the American people are doing. They are tightening their belts. We have had an emergency in this country. That emergency was being hit on September 11 by terrorists. That means we have got to come up with more money for that war on terror. If you have a war, if you have an emergency, it is reasonable, it is logical, it is practical to reduce some of the other spending that has lesser importance, not to go on spending as usual. That is not what an American family can do. That is not what an American business can do. I know we are in a situation where the people that lobby us say let us have more spending for this, for that. I know that we tend to go to the committees that we support and that we push for more spending as we gain seniority on those particular committees, but that is a problem we have got to deal with. Somehow we have got to realize that what made this country great was not being overtaxed. What made this country great was a Constitution that says that those that work hard, that try, that invest, that educate themselves are going to end up better off than those who do not. Yet we have continually pushed for increased taxes on corporations, increased taxes on bills. If a young couple decides to get a second job so they can have more for their families, we not only tax them at the same rate, we increase the rate of taxation so they have to pay more taxes to the Federal Government. Let us get back to our roots. Let us get back to what makes this country great. Let us not overtax ourselves and discourage business expansion. Let us do what we need to do in this House. We have let, and the gentleman from Washington (Mr. Dicks) has said that a lot of this is now entitlement spending; and we have got to deal with that too. But the discretionary spending is what we are talking about tonight. That is what we should deal with. That is what we should say is reasonable, to limit that spending increase to inflation.

Mr. SMITH of Michigan. Mr. Chairman, will the gentleman yield?

Mr. SMITH of Michigan. Mr. Chairman, I move to strike the requisite number of words. Before I speak on the amendment, with the permission of the subcommittee ranking member and the chairman of that committee, I want to make a couple comments on Joe Skeen. Joe is a hero of American agriculture; and that is when I got to know him, doing the excellent job on the Committee on Appropriations Subcommittee on Agriculture. Joe first ran for Congress as a write-in candidate. Amazing. And most of us are politically aware enough that we know that that is an almost impossible task at local government, let alone for the United States Congress. Joe served in the Navy. He was a graduate from Texas A&M, a farmer, a sheep rancher on a 15,000-acre-plus operation. Joe, maybe it has gotten bigger since I read the 15,000. At age 33, he was one of the youngest State senators in New Mexico. Later he ran for Governor, and lost by 1 percent point. Joe, I am proud to have had the opportunity to serve with you. So my best compliment to you and your family. Now, on the amendment, my nose probably is out of joint on overspending. Some of us in desperation do not know exactly what to do to try to reduce the tendency to spend a lot of money to try to please the Senate. Sometimes we say it is to please the other side of the aisle. So when an amendment comes forth to save $162 million, it influences what I came here to Congress to do, and that is to keep Social Security solvent. I introduced my first Social Security bill the first year that I entered Congress and every session since. Each has been scored to keep Social Security solvent. So if this amendment saves some money and if this appropriations bill is the start of overspending, it has been my experience throughout my 9\1/2\ years in Congress that we pass a budget which may be irrelevant in terms of controlling spending. Obviously, if you look at the number of times that the budget numbers have prevailed, it is irrelevant because we never stick to it. But what happens is in the Committee on Appropriations when we come up with the 302(b)'s, the first bills that we pass and put before this Chamber are easy to pass because there is something in it for everybody. And so we pass the early bills that are somewhat popular, somewhat overspending and then we end up with the tough bills later on for veterans, for education; with an appropriation level that is so low, so below anybody's request that you have to increase the amount--overspend the budget, and you come up busting the budget. Look, Republicans have done a bad job in terms of holding down spending. Sometimes we blame it on Democrats. Sometimes we blame it on the Senate. But somehow, someplace, somewhere we have to do the cutting that is tough. Let me give you the statistic from the Heritage Foundation. Most of the benefits of government go to a population that pays less than 1 percent of the income tax. So we are evolving into a society where most of our constituents say, well, a little more spending and a little more help from government is good, because a lot of those constituents do not pay their equivalent share of the income taxes. That is because we have made the income tax so progressive. This chart represents the biggest financial problem that government is facing, and that is where we are going on the future of Social Security. It is an entitlement program. We have made the promise. We have made the commitment. People have gauged their savings and their lives for their retirement to include what they are going to be getting from Social Security. We are moving into an era of spending frenzy that will lead us to a time when we will not be able to pay those benefits. So I say, every chance we have, let us grit our teeth and let us come up with the courage we need to do what is right and that is to reduce spending and not dig ourselves into a kind of hole where we are forced to overspend in the last two or three appropriations bills.

Mr. SMITH of Michigan. Mr. Chairman, the gentleman seems to be suggesting that we should stick to the budget, to the President's request. If a family loses income, a family loses their job and they go on unemployment, the budget they started when they had a full job is not going to continue spending as usual. Maybe we should even reduce it below the budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, July 19, 2002 marks the 20th Anniversary of the Hot Air Jubilee in Jackson, Michigan. This event began in 1983 when Jackson Balloon Pilots Tony Hurst and Jim Ahearn suggested the idea to Jackson Resident Mike Brown. The initial goal was to provide a new and exciting family oriented activity to attend in the Jackson area. The inaugural event hosted 17 balloons from Michigan and Ohio and was launched from the Sparks Foundation County Park, Cascades Park, and the grounds of Jackson Community College. At the first Jubilee, approximately 20,000 people were in attendance for the initial launch. In 1996, the Jackson Hot Air Jubilee moved to Reynolds Field at the Jackson County Airport to accommodate the growth in the event. Since that time, the Jackson Hot Air Jubilee has grown to over 65 balloons, with participants coming from as far away as Japan and Australia. In 2001, over 100,000 people attended the event. The Jackson Hot Air Jubilee has a positive impact on the community by stimulating the local economy through hotel stays, restaurant meals, and other expenditures at local Jackson businesses. The Jubilee also contributes more than $15,000 to local civic organizations in the Jackson area. The success of this event over the past 20 years is due to the hard work and dedication of the volunteer planning committee and the more than 600 area volunteers from all walks of life that contribute to the Jackson Hot Air Jubilee. Therefore, I would like to commend the 35 member all Volunteer Hot Air Jubilee planning committee, which works year around to produce this fine event. I also want to recognize the more than 600 local volunteer citizens that contribute their time and energy to the Jackson hot air jubilee, without whose assistance this event would not happen. The members of the business community and private citizens that sponsor the Jackson Hot Air Jubilee also deserve recognition for supporting such a fine family oriented event for the citizens of the 7th Congressional District and beyond. I would also like to commend the Jackson County Airport for opening their facility for the Jackson Hot Air Jubilee and the community at large. The Jackson Hot Air Jubilee is an exemplary model of a community working together to achieve a common goal: providing a well-organized, family oriented festival for all to enjoy. I commend the Jackson Hot Air Jubilee for a job well done, and wish the Committee continued success for many years to come.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it has come to my attention that as we talk about corporate accountability, maybe it is an appropriate time to talk about government accountability. If corporations did what government has been doing, they would be chastised and probably sent to jail. Let us take this opportunity to start reviewing what government does in terms of accountability, in terms of honesty with the American people, who are really, the investors and stock-holders in government. The taxpayers of this Nation send their money to Washington and then, guess what happens? We do not do a very good job and we're not being honest with the public. There is a lot of hoodwinking. Let me give a few examples. The Social Security trust fund. Actually, there is no trust fund. It is an accounting gimmick where there are IOUs given to the Social Security Administration with the provision that they cannot cash in those so-called IOU government bonds. It can only be an act of Congress. So we have, number one, fooled the American people with the words ``trust fund'' when it is really not a trust fund. Secondly, we have spent all that money on other government programs and written these nonredeemable IOUs. We have experienced under Secretary Rubin and the Clinton administration, and now in the Bush administration, when we reach the limit of allowable debt, well, it is disregarded. We have a law that says we cannot go deeper in debt in this country without the permission of the United States Congress, signed by the President. Yet we play games with it, with the disinvestment of retirement funds for civil servants. So when we exceed the debt limit, what happens is the Treasurer starts pretending that we are not writing those IOUs to the retirement funds for government employees. Some call it disinvestment. This is another area where it just would not be acceptable nor would it be legal if it were done in the private sector. The lockbox. The lockbox is another hoodwinking gimmick. It simply was an effort of Congress, both Republicans and Democrats, to try to make people believe that there was some additional security to Social Security trust funds if we had the gimmick called a lockbox. But nothing changed. The IOUs were still written and the money was spent for some other purposes. Again, what I am trying to suggest is we take this opportunity to review what we are doing in the United States Congress and the Federal Government as a whole. In 1995, when the Republicans took the majority in this U.S. House of Representatives, one of the first things we did was to require an audit of all government departments and agencies. That initial audit came back and reported that, in most of these agencies and departments we cannot audit because their books are so bad. But what they had audited so far we found $100 billion that is unaccounted for in government assets, which is what government supposedly owns. The auditors could not find that $100 billion worth of property. The Government Performance and Results Act was another thing Republicans did when we came into the majority in 1995. And that required annual audits of all the departments and agencies. The auditors came back and said the books are so bad in so many of these departments and agencies that we are unable to give them an audit. These were supposed to be annual audits. Yet from 1995, 7 years later, there are still agencies and departments that do not have their books in order in such a way that they can actually be audited. We play games in our appropriation process. We come up with a budget resolution that, since I have been here for the last 9\1/2\ years, that budget has never been adhered to. And frankly, Mr. Speaker, I am upset that while we get on our pompous soap boxes here and criticize the corporate world, that needs criticizing and they need to go to jail, and they need to go to real jail, not some kind of country club jail for white-shirt crimes, we should also be looking inward at our own accounting practices and the way we handle taxpayers' money. 302(b)'s. This is a provision where, after we pass the budget, we send it to the appropriators and the appropriators come up with how they are going to divide that allotted money between the several appropriation bills. But what has been happening, and what I suspect is going to happen this year, is we turn out the early appropriation bills, and we add extra money to those bills so it is attractive to everybody. And then the final bills that come out, that are very popular, whether it is veterans or military or education, they say, look, we do not have any more money under the budget and we end up overspending. Let me just conclude by saying we need to have a lot better accountability to the investors in the United States Government; that is the taxpayers' money. Let us take this opportunity to review, renew, and do a much better job of the way we handle this business of government and taxpayers' money.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, today the Committee on Appropriations marked up and passed out the agricultural appropriations bill. That will be on the House floor next week. In that effort this morning, there was an attempt to put language into that appropriations bill that would have the effect of having limits on the payments that go out to some of the very, very, big, big farmers. That amendment was squelched. A tremendous amount of pressure. In the House, where we attempted to instruct conferees when the farm bill went through, that vote was overwhelming in giving the will of this House, this body, that we should have some kind of payment limits for farmers on farm price supports. Let me just briefly, Mr. Speaker, explain the problem. We sort of hoodwink a lot of the American people by saying there are limits on what a farmer can receive. Not so. Because there is a loophole in the law. It is called generic certificates. After a farmer reaches the $75,000 limit that is allocated in the bill as a limit, from that point on there is a gimmick called generic certificates, that the government will sell the farmer the generic certificate to pay for the commodity. The farmer ends up getting the same kind of benefit as what is limited under the $75,000 limitation. I would call to my colleagues' attention that next week we are trying to get language in the agricultural appropriations bill that will have some kind of a limit. So some of the farmers that are huge, that are big, are not getting million dollar payments that put the smaller farmer at a very distinct disadvantage, and that is good policy. We should not have programs that wipe the small farmer out, and that is what is happening. Because the farm program is capitalized on land values, land values have gone up because of this last farm bill, and that means that it is harder for a small farmer to survive. Let me just ask my colleagues to seriously look at this issue in the next several days and consider the amendment that we intend to offer on the floor.

Mr. SMITH of Michigan. I yield to the gentleman from California. Video Game Bill

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Madam Speaker, today I rise to discuss the farm bill that will be up in full Committee on Appropriations tomorrow, and I suspect the plans are to bring that legislation before this Chamber next week. I would like to discuss my and many others' beliefs that a great inequity exists in our farm policy that has been passed in the farm bill, and the fact that we have a chance to correct that inequity in this appropriations bill. This is not a new topic in Congress and, as well, it is not a new topic on the floor of the House. As a farmer and a former administrator of farm programs at USDA, as a member of the Committee on Agriculture, I, like most of us, know the importance of providing help to our family farms. The inequity of farm subsidies, because there is no limit on price support subsidy guarantees, results in giving the very large farmers a greater advantage. That means they have price protection on all of the total acreage of the particular crops that they grow that were subsidized by the farm program. That means that we encourage more production and that means that the smaller farmers have a harder time surviving and that means that the larger farmers tend to buy out the smaller farmers. While reasonable limits have been set for direct price support payments to farmers, these limits are meaningless to large or corporate farms. Why? Because of the creative use of generic certificates. Certs, as they were called, were introduced in 1999 as an amendment to the 1996 farm bill. They are negotiable certificates which CCC, the Commodity Credit Corporation, exchanges for a commodity owned or controlled by CCC. They were designed to let producers receive the price support subsidy rather than forfeit their crop to the government, but it gives that farmer a loophole, an end run, if Members will, to have the same price supports even though in the farm bill we were told that there are limits of $75,000 on price support payments. But the fact is that there is no limit on that larger farm that owns whatever, 40, 50, 60,000 acres, because he can end up receiving certificates that end up giving that particular landowner the same value as the rest of the price support loans that are subject to the $75,000 limitation. Sadly, farmers quickly figure out the loophole in the use of certificates that allows these unlimited price supports on the crops that a farmer grows. The more land one farms, the more certificates one can purchase, bypassing any limits that are otherwise existing in the farm bill in current law. The availability of this creative mechanism to bypass limits encourages overproduction and, as I mentioned, the buying up of land from smaller farms. This is the acquisition of as much land as possible to maximize payments from the government, and I think the bottom-line request is, why should 17 percent of the farms in America get over 80 percent of the commodity payments? I understood this principle long ago. I understood how forfeitures and certificates became literally overnight methods to circumvent payment limits. I introduced the reform of farm subsidy payments during the House debate on the farm bill last October; however, our farm policy, driven by our agricultural committee leadership favors the certificates that can be used as the loophole or end run to those very large farms. The Senate, however, successfully implemented reasonable payment limits and curtailed the unlimited use of generic certificates by a vote of 66 to 31. Then the farm bill came to conference, and on April 18, after days of stonewalling and nonresolution, I introduced a successful motion to instruct farm bill conferees to accept real subsidy payment limitations like the Senate had and limit the unbridled use of generic certificates; and a bipartisan majority of the House overwhelmingly passed that motion by a vote of 265 to 158. It was ignored in conference, and I am still working with Senator Grassley. Tomorrow, when the Committee on Appropriations meets to discuss this bill, I hope they will look at the effects on the small farmers, the traditional family-size farms, and have some kind of a payment limitation when this bill comes to the floor next week.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I rise in support of H.R. 3130, the Technology Talent Act of 2002. For some time now, we have recognized the need to improve math and science education in America. The Science Committee, and the Research Subcommittee which I chair, has taken one of the lead roles in advancing these reforms. Last year, the House passed legislation generated by our Committee, the Math and Science Partnerships Act, that authorizes a number of programs at the National Science Foundation aimed at improving K-12 education. More recently, we have turned our attention to an equally important problem: improving math, science and engineering education at the undergraduate level. Our Subcommittee held hearings to identify the problems of our current educational system, and more importantly, to understand how to encourage and support changes that will provide solutions to these problems that benefit all students. What we learned was that there is no single problem that has resulted in the talent gap and workforce challenges we face today, but rather, an assortment of problems that demand a variety of solutions. Much of the problem is simply a supply and demand issue, the marketplace is increasingly demanding a workforce skilled in the sciences and engineering, while the supply of people capable of filling those positions has remained flat. This has forced us to look to foreign students to help fill the gap, and we now are in a situation where only half of all engineering doctoral degrees in the U.S. are awarded to American students, and a similar disproportionate number of all high-tech jobs are filled by foreign workers. One task that doesn't require scientific or engineering expertise and that can even be understood by politicians is that if we don't fill the current talent gap in these fields, we risk damaging America's position the global economic, technological, and scientific leader. In response to these challenges, the Science Committee has put forth the bipartisan effort that is before us today--the Technology Talent Act. It establishes a performance-based competitive grant program at the National Science Foundation that would provide funding for institutions of higher learning to implement innovative proposals designed to increase the number of undergraduates graduating in math, science, engineering, and technology. It also addresses other areas such as institutional reform and faculty development, and authorizes NSF to provide awards to universities for improving their research instrumentation and provide undergraduate students valuable research experience. The bill takes advantage of NSF's competitive, peer-reviewed system, allowing institutions to develop their own proposals to maximize results and promote creativity. The legislation also emphasizes accountability and regular program evaluation, institutions that fail to meet the goals set forth in their proposals may have their funding terminated or reduced. It is clear that if we want to maintain our competitive edge in the world--if we want to remain the top economic power, the top military force, and ensure the safety of our citizens from terrorist aggression--it is critical that we do a better job of preparing our students for careers in science, mathematics, engineering, and technology. The Technology Talent Act provides the reforms necessary to meet these challenges. I would like to thank the Chairman for his leadership on this legislation, and I urge all members to support this bill. Mr. Speaker, I yield back the balance of my time.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman for yielding time. I am a farmer. I think, just for the sake of being honest and not hoodwinking the American people, maybe we should get this, if you will, discussion out of the hay mound and down on the barn floor where we can chew it up seriously. The fact is, maybe I would make an analogy that my family that I love went out and spend more money than they should and now the question is, do we pay that credit card bill? So, reluctantly, probably as one of the most fiscal Members of this Congress, I say, look, we have to pay our bills. The problem has been on that spending. Let me give my colleagues an example. If we held the line on spending since President Clinton came into office in 1994 we would not have this problem today. That is not just Democrat control; it is the Republican control. There is an overzealousness to spend, and that is what we have been doing. Let me give my colleagues this example. In 1998, we passed and executed a plan designed to balance the budget by 2002. That is what we promised in 1998. That budget projected fiscal 2002, this year's revenues, at just under $1.89 trillion. Actual revenues, even after the tax cut, were way in excess of that, according to CBO, and now are expected to come in over $2 trillion, or more than 5 percent above the projection. However, it was spending. Our projection in 1998 for outlays were under $1.89 trillion and are now expected to be $110 billion higher than we projected. It should be clear that it is spending. Now, this tough question: I do not want to vote to increase the debt ceiling without some kind of a plan like every family has, like every business has, to say, look, we are going to borrow a little more, but we are going to have to pay it back sometime. How are we going to eventually pay it back so that we do not leave this mortgage to our kids? Mr. Speaker, we have a situation where the $35 billion in increased defense expenditures and $6 billion expanded homeland are part of the problem. We have to deal with that national security problem. Let us pass this debt ceiling, but, likewise, let us move ahead and have a plan of how we are going to repay this debt so that we do not leave it to our kids.