Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. I will vote for it.

Mr. SMITH of Michigan. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I agree with the gentleman when he says let us not demagog this. Let us be perfectly up front of what is happening. We did away with subsidies for farmers in the freedom to farm bill last year. Risk management is a new type of insurance. It is insurance that not only is sunshine insurance on the weather, but it is also insurance on what happens to those crop prices in the new revolution of world trade where other countries can affect now the price as much as production in this country. So we are moving into a new area of insurance called risk management insurance. The amount of money that we call commissions is a subsidy to farmers, because if that commission is not paid by taxpayers in this transition to this new type of insurance program, then it is going to be paid by the farmers. That money is going to be charged to somebody. Right now the Secretary of Agriculture is negotiating to the best of his ability to get those commissions as low as possible. So I would suggest with great respect for the people that made this amendment's feeling of need for the WIC Program is that it is not a good policy judgment to take it out of a new risk management program as we try to move farmers into their decisionmaking of deciding how much of what crop to plant instead of Government doing it, as we put the burden on farmers for the risk of disaster and the risk of their success in farming, as we take away the deficiency programs that taxpayers have paid to farmers for the last 50 years. So in an effort to make this transition, I think it is very important that we move farmers into reaching into their own pocket, which they are doing with this insurance program, and satisfying their risk management needs. But it is a new area. Let us not cut down or cut back on the transition to this new era where agriculture and farmers and ranchers are moving into the private sector and the real marketplace.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I hope the American people that are observing this debate over taxes now realize why tax cuts come so slowly in this Congress. There are some elitists in this Chamber and a lot of egos that think that Washington can spend your money better than you can. The tax bill currently before Congress is going to benefit every American, whether it is a $400 more in your pocket or $1,500 more in your pocket. Middle class working families are going to gain a little bit from this tax cut. But this tax cut is just a little bit. Compared to the $250 billion tax increase that we just had 4 years ago, this is an $85 billion net tax cut, just a portion of the huge tax increase that just happened a few years ago. If we are going to have a country that has been as successful as we have, we have to get back to a system where we let the people keep more of the money in their pocket, where we reward the people that work hard, that try, that save, that invest, and the people that work hard are better off than those that do not.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I will vote for passage of this bill with reluctance. Congress should not continue to add more funds to appropriations bills that exceed what the administration suggests is needed. This appropriations bill provides $666 million more than the administration requested in their budget. The bill provides $25.1 billion for the Department of Housing and Urban Development, $8.8 billion more than fiscal year 1997 and $550 million more than the president requested. The bill represents no solution to the ``section 8'' funding that will be a huge financial challenge in the next several years. One other area that could well assist the conference committee to reduce appropriations to last year's levels are the substantial reserves now being held as ``contract reserves'' for section 8 tenant- based contracts. The accounting firm Price Waterhouse has audited the reserve numbers. Their preliminary estimate of the net excess section 8 budget authority minus HUD's proposed uses is $7.2 billion. GAO estimates the ``reserves'' could be much higher. We need better information from HUD. Congress should not continue to accept sloppy management in our Government departments.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, as we approach decisions on appropriations bills and Federal spending that goes to individual States, I am very concerned about a recent study indicating that my home State of Michigan is getting shortchanged. Michigan ranks in the top 10 in the amount of taxes we pay into the Federal Government and at the bottom in terms of the benefits we receive in return. According to this study by the Northeast-Midwest Institute, Michigan ranks 47th in total funds it gets from the Federal Government and deal last in the amount it gets per person to repair its roads. Michigan citizens have the most to gain if we allow them to keep their tax dollars at home rather than sending taxes to Washington. Mr. Speaker, for the Record I would like to submit an article written by Lisa Zagaroli in this morning's Detroit News on this very issue. (By Lisa Zagaroli) Pothole-plagued Michigan ranked dead last in the amount of money per person that the U.S. Transportation Department doled out among states last year, a new report shows. ``We've been complaining for a long time about getting ripped off by the federal government and this just confirms that,'' said John Truscott, a spokesman for Gov. John Engler. ``We knew we were near the bottom, I didn't know we were at the bottom.'' The transportation department spent $77 per Michigan resident in the 1996 fiscal year, for a total of $743 million, according to the study by the Northeast Midwest Institute, a non-profit policy organization. Engler wants the federal government to give Michigan an additional $200 million. Michigan's per-capita share of U.S. transportation dollars compares to $879 per capita in sprawling Alaska, $296 in Wyoming and $252 in Montana. But the higher dollar amounts weren't reserved for large, sparsely populated states. Connecticut, a small state with a third of Michigan's 9.6 million population, got $179 per person. New Jersey, which has 8 million residents, got $148 per person from the federal agency that funds roads, bridges and other transportation projects. Rep. James Barcia, D-Bay City, said he, too, was surprised that Michigan ranked dead last despite the ``pitiful shape'' of its roads. ``This underscores the need to work together in a bipartisan fashion to make sure Michigan gets a fair return,'' he said. Barcia sits on the House committee that is rewriting the funding formula for transportation dollars. Michigan currently is a ``donor state''--paying more in federal gas taxes than it gets back. Michigan ranked third from the bottom in overall spending by the federal government, about the same as it has in the last several years. The state received $4,131 per capita in federal spending, only 81 percent of the national rate, or $941 less per person, the report said. ``This is one of the reasons we are so big into block grants, so we can figure out where our tax dollars are spent instead of some federal bureaucrats,'' Truscott said.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I think it is very disingenuous when our friends from the other side of the aisle say they want tax cuts. First of all, I think Republicans are making a mistake because what is happening now is the liberals spend 10 percent of their time on developing policy and 90 percent on spinning it. Republicans spend 90 percent on developing policy but only spend 10 percent on spinning it. So there is a great deal of misunderstanding out there. Mr. Speaker, I will include as part of my remarks Jim Glassman's article in yesterday's Washington Post that spells out some of the differences between the Republicans and the Democrats. I would like to simply conclude that we have a tax system that punishes our businesses to the extent that they have to move out of this country. The cost of labor is 10 to 12 percent of the cost of producing an item. The taxes run up to 39 percent in this country. We need to be looking at the kind of tax policy that is going to expand the economy. [From the Washington Post, July 8, 1997] Then There's Plan B (By James K. Glassman) The new Labor government of Tony Blair last week passed its first budget, and the main feature was a tax cut that gives British businesses the lowest rates in the industrialized West. ``The central purpose,'' said Chancellor of the Exchequer Gordon Brown, ``is to insure that Britain is equipped to rise to the challenge of the new and fast- changing global economy.'' Contrast those sophisticated sentiments with what President Clinton was doing at the same time in Washington--making noises that he'll veto an extremely modest tax-relief bill if it doesn't meet his own specifications. Clinton may be just bluffing, but he's taking delight in fanning the flames of class warfare just as Britain's Socialists are eschewing such nonsense. But what if the president does veto the bill that emerges from a House-Senate conference? Then, Republican leaders-- notably, Speaker Newt Gingrich--should tell him, in the immortal words of Clint Eastwood, ``Go ahead. Make my day.'' They should make it clear that if Clinton rejects the puny cuts in the current bills (amounting to one percent of projected tax revenues over the next five years), then the budget deal is off forever, and Plan B will swing into effect. I'll describe Plan B below, but, first, let's look at what divides the antagonists: Child credit. Under GOP bills, families that earn less than $110,000 will be able to knock $400 to $500 per child off their final tax bills. The median two-earner family (making $53,000 a year) with three kids would see taxes fall from $5,100 to $3,600--a huge cut. Clinton wants the credit to apply as well to many families that don't make enough to pay income taxes, and he starts phasing out the break for couples making $60,000. Capital gains. Under the House and Senate bills, the top rate would fall from 28 percent to 20 percent on the sale of assets such as stocks and bonds. Clinton wants a 30 percent ``exclusion'' from ordinary income, which means that, for top earners, the rate would fall to just 27.7 percent--a nose- thumbing mockery. The House wouldn't tax profits boosted by inflation. Democratic critics of the GOP plan say that it reduces taxes more for those with high incomes than those with low. Maybe so, but it's nearly impossible for a cut in income taxes to do anything else. That's because low-income Americans pay little or nothing. The figures are astonishing. According to the IRS, the top 5 percent of earners pay 47 percent of the nation's income taxes. The top 10 percent pay 59 percent, and the bottom 50 percent of earners pay only a 5 percent share. Apparently unaware of such numbers, the Democratic Policy Committee recently sent an outraged fax to talk-radio hosts around the country: ``Under the current GOP proposals, the top 1 percent of Americans would receive more benefits than the combined bottom 60 percent in tax cuts.'' But the IRS reports that the top one percent of Americans pay 29 percent of the nation's income tax bill; the bottom 60 percent pay just 9 percent. So, to be fair, the top one percent should get triple the cuts of the bottom 60 percent. Teh resourceful administration has a way to give tax cuts to people who don't owe taxes. It wants to send checks-- welfare benefits to inspire breeding--to millions of families that don't qualify for tax breaks because their income tax bills amount to zero. Will Republican leaders compromise with the White House before going to conference? If they do, they should be laughed out of office. Economic consultant Jude Wanniski told clients last week that the president's ``tax proposal is clearly at the level of fun and games, with Clinton trying to steal Newt's underwear after talking him out of his outer garments in the 104th Congress.'' What happens if Gingrich stands firm and Clinton issues his veto? That triggers what I call Plan B: (1) The budget deal negotiated in good faith in May is null and void. (2) In its place, Congress passes a stripped-down spending plan for the federal government with none of the president's $30 billion-plus in new and expanded programs. (3) Congress passes a back-up resolution that sets spending at 1997 levels for departments covered by any appropriations bills the president vetoes. Finally, (4) Medicare won't be touched. Instead, reductions needed for a balanced budget by 2002--or, preferably, sooner--will come from cuts in spending growth and postponement of tax relief. Congress will then get down to the real work of reforming entitlements and the tax code, not the silly hodgepodge of the current budget. Tax relief, 1997-style, wouldn't be a great loss. (The lack of capital gains cuts could trigger a stock market crash, but shares would likely recover.) Indeed, in many ways, the tax bills are abominable. They further complicate the code and include Clinton's latest steps to nationalize health care and establish new education subsidies for a favored few, plus breaks for consumers of hard apple cider, for speedboaters, Oklahoma oil-well owners, sellers of archery products and whaling captains. These payoffs to interest groups--including the religious right, which is backing the child credits--are just business as usual for tax writers. They're also a serious detour from the road to a far more sensible goal, a flat-rate income tax, which, according to a poll last month for Fox News, has the support of 57 percent of Americans and the opposition of just 27 percent. As it stands, the GOP tax plan is barely acceptable. If the president insists on any changes, he'll tip the balance. Like Eastwood, I'm half-hoping he does.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I think it is very disingenuous when our friends from the other side of the aisle say they want tax cuts. First of all, I think Republicans are making a mistake because what is happening now is the liberals spend 10 percent effort on developing policy and 90 percent on spinning it. Republicans spend 90 percent on developing policy but only spend 10 percent on spinning it. So there is a great deal of misunderstanding out there. Mr. Speaker, I will include as part of my remarks Jim Glassman's article in yesterday's Washington Post that spells out some of the differences between the Republicans and the Democrats. I would like to simply conclude that we have a tax system that punishes our businesses to the extent that they have to move out of this country. The cost of labor is 10 to 12 percent of the cost of producing an item. The taxes run up to 39 percent in this country. We need to be looking at the kind of tax policy that is going to expand the economy.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, my vote will be in favor of passage of this bill, and H.R. 2037, the budget enforcement provisions, have been made part of this bill that will help us make sure that we enforce the provisions of our intent to balance the budget and make these spending cuts. Congressional Budget & Impoundment Control Act of 1974 Permanently extends the requirement that budget resolutions cover a five-year period. Similarly, extends indefinitely the enforcement of the five-year spending and revenue levels set forth in budget resolutions through points of order. Simplifies and updates points of order that are used to enforce the budget resolution's spending and revenue levels. Provides for adjustments in the budget resolution levels for legislation appropriating funds for designated emergencies, arrearages and the International Monetary Fund. Eliminates the need to waive the Budget Act for a reported bill that violates the Act but is cured by a self-executing rule. In such cases, the point of order no longer lies against the bill. amendments to the balanced budget and emergency deficit control act of 1985 Adjusts and extends statutory discretionary spending limits, which are enforced through sequestration, through fiscal year 2002. Provides for adjustments in the discretionary spending limits for appropriations for emergencies, arrearages, and the International Monetary Fund. Extends pay-as-you-go requirements, which provide that entitlement and tax legislation must be fully offset, through fiscal year 2002. Modifies baseline that is used to ``score'' legislation so that committees get credit for eliminating entitlement programs. Eliminates accrued paygo balance and savings from reconciliation to ensure that all savings are used for deficit reduction.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, 4 years ago when I first came to this Chamber, the debate was whether or not to increase taxes on Americans in this country by $250 billion over that 5-year period? Tomorrow I think we all should celebrate, Republicans and Democrats, because Congress is passing the first tax cut in 16 years. We talk about whether it is for the rich or the poor, but it seems to me that some of our focus should be on what is going to be the kind of tax incentives that result in better and more jobs that pay more, that allow the individual to have a larger paycheck and increase their standard of living. Here is my opinion. This country became great because we had a system where those that worked hard and tried and made an effort and saved and invested ended up better off than those that did not. Now we have got people suggesting we should have a tax system to level the playing field, to punish those that saved and invested and to reward those that did not. We should celebrate our tax cut tomorrow. That gives tax cuts to working American families.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would like to spend a couple of minutes talking about some of the things that were not in the budget agreement that should have been in the budget agreement. One is the problem that we are facing on the insolvency of Social Security; and another is the situation developing with an increasing insolvency problem for our Medicare Program. What we are doing in this country now is we are asking young working families to pay in additional taxes to pay for the benefits going to senior citizens in such areas as Medicare and Social Security. I am especially concerned with Social Security because according to statistics, more and more young people are depending on that Social Security for retirement benefits as they are saving less than past generations for their own retirement. Let me briefly discuss the problem that we are running into on Social Security. Since it is a pay-as-you-go program, the taxes paid in by workers are taken by the Social Security Administration. Those Social Security taxes, those FICA taxes, are then paid out to existing retirees. So despite what many Americans think, that there is some kind of savings, there is not. Since 1983 when we substantially increased the Social Security tax on working Americans, we have had a surplus coming into that fund. For every penny of surplus that has come in, we have seen the Federal Government--the U.S. Congress and the President spend every cent of that surplus coming in from Social Security taxes for other social spending that this Government has suggested it needs. Here is the problem. When some of us brag that we are actually balancing the budget in the year 2002, the fact is that in that year, 2002, we are actually borrowing $110 billion from the Social Security Trust Fund. So the budget is not truly in balance. Truly what we are doing is pretending that we are in balance because we are using money that is coming into the Social Security Trust Fund and spending it for other purposes. Mr. Speaker, there are only two ways to deal with the insolvency of Social Security. We either in some fashion increase revenues or we decrease benefits. I have introduced a Social Security bill in this last session. It is the only bill introduced in the House that deals with the problem of the insolvency of Social Security. That bill has been scored by the Social Security Administration to keep Social Security solvent for the next 75 years. Somehow we have to get the message out to the American people, especially the younger people working, that they had better look at what their retirement benefits are. They had better look at the transfer of wealth from the working generation to the retired generation; and as we have more and more retirees in relation to the number of workers, the problem is compounding. Here is what is happening. No. 1, people are living longer. Our medical technology has done a great job. When we started Social Security, the average age at death was 62-years-old. Today, guess what the average age at death is? The average age at death today is 75- years-old. Once you live to be 65 and start collecting Social Security, then, on the average, you are gong to live to be 84 So you have, No. 1, people who are living longer, and then, No. 2, we had the biggest increase in the birth rate ever before in our history with the baby boomers, the children of the veterans of World War II. Those baby boomers are now in their maximum earnings years. They are going to start retiring around 2008, and when they start retiring, of course, two things happen. Many more people will collect benefits and the maximum earnings of those people are not going to be taxed anymore for Social Security to pay out benefits. So the experts are suggesting we are going to run short of money as early as 2005. Maybe it is going to be 2011 or 2012, but it could be as early as 2005. Then what do we do? How does this Federal Government, how does this Congress, Democrats and Republicans, start paying back what they have borrowed from the Social Security Trust Fund? How do we come up with the additional money necessary to pay existing benefits? Look, politicians are going to have to take their heads out of the sand and start dealing with these tough, real problems that are facing us in the future. It is not politically popular, so many Members think they are going to be beat up back home, and I suggest that they may be right. But we have to take our heads out of the sand. Let us start dealing with these problems.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman. The problem is, what we do in this bill is we keep everything else the same. We say it has to be an American crew, it has to come under all American laws, pay all U.S. taxes. It has to be American owned. But in the cases where an international company can build that ship much cheaper than they can build in this United States, allow that bid to happen. Let us buy American, but where it is unreasonably high and right now the United States in our shipbuilding ports are not interested in building those ships for the Jones trade. They turned down Walt Disney. You might have seen that. They turn down cruise ships. What this bill does is it says that at least some of those component parts, that ship can now be built in another country. If we want to expand our seaways and our ships, then I think we have to face up to the fact that we are losing jobs in this country. I yield to the gentleman from Colorado [Mr. Schaffer], who has worked a long time on this issue.

Mr. SMITH of Michigan. I thank the gentleman very much. Mr. Speaker, if I can prove to my colleagues that we are going to end up with more American jobs, that our national security is going to be enhanced by the increased number of ships, will my colleagues support this bill? It is dramatic. Look at it, study it. I would suggest to my colleagues that we do not have this kind of requirement for our trucks, our trains, our airplanes or anything else. If we had done this to the American automobile industry and shut off any imports coming into this country, we would not have the quality of cars. Today, we have the highest quality, the best price, the best deal car in the world because there is competition. I would suggest to my colleagues, Mr. Speaker, that we have to face up to the fact that we have an antiquated law that needs to have competition brought into this industry. We are dropping the bill tonight.

Mr. SMITH of Michigan. Mr. Speaker, today we are introducing a bill that changes the law that was passed in 1920 that is now disrupting commerce, that is now putting Americans out of jobs and out of business, that is making American consumers pay much more for their products than they otherwise might pay. That law in 1920 was passed in order to get the United States of America going in terms of building our sea fleet, our ships, in terms of getting a crew of sailors that were trained that could help this country in time of war, in time of commerce. That bill is known as the Jones Act. That Jones Act bill does several things. It said that one has to have a U.S.-owned ship, that it has to be built in the United States, all the component parts and everything else built in the United States, that it has to be American sailors that pay taxes in this country. I say some of that is good, but let me tell my colleagues what has happened to this bill as we have lost 60 percent of our fleet that goes from U.S. port to U.S. port in this country. We are forcing sailors out of jobs; we are forcing businesses out of business. I will give my colleagues a couple of examples. Right now in Michigan, wheat can be purchased from Canada, the same priced wheat, and shipped to other ports through the seaways at a cheaper price than they can buy it much closer in United States ports. I would like to get the gentleman from Maryland [Mr. Gilchrest] to give me the case, because I cannot remember what that was.

Mr. SMITH of Michigan. Am I allowed to whistle, Mr. Speaker, in the Chamber to get everybody's attention?

Mr. SMITH of Michigan

Mr. SMITH of Michigan. I was going to talk about another issue, but I'll save that for another day. It seems important that we point out, Mr. Speaker, that over the last 40 years of Democrat control of this House, taxes increased much faster than inflation. My first year in Congress, 1993, the Democrat leadership without a single Republican vote decided that the best way to go was to increase taxes $250 billion over that 5-year period. Now, what we are talking about is giving only a small part of that 1993 tax increase back to the American people. We are only giving $85 billion back of that $250 billion tax increase. What we have got to do is figure out the kind of tax changes that are going to increase job opportunity, increase paychecks and give more freedom and opportunity and responsibility to individuals.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, on rollcall No. 208, I was unavoidably detained. Had I been present, I would have voted ``yes.''

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would like to include a newspaper article in the extension of my remarks that is from the June 13 Wall Street Journal. It is called Raise Taxes, Wait Four Years, And Boom, by Paul Gigot. The fist paragraph says, ``When it comes to writing history, you can't beat the Democrats. Witness the smooth way they're taking credit for this year's roaring economy and even using it to rehabilitate their 1993 tax increase.'' Then the rest of the article goes on to say that the problem is that tax increases depress the economy. One cannot spin it any other way. Look, we have a strong system in this country that rewards the people that work, that try, that save, that invest; and despite that tax increase, our economy surged ahead. Mr. Speaker, there are some things that this country needs to do if we are to be competitive in a world market, and one of those things is to cut taxes. The way we do it, if it results in more investment, more savings, more buying of the kind of machinery and tools that makes us more efficient and more competitive, the better off everybody is going to be. So I think it is important that we move ahead with these tax cuts. Mr. Speaker, I include for the Record the article to which I referred. [From the Wall Street Journal, June 13, 1997] Raise Taxes Wait Four Years, And . . . Boom (By Paul A. Gigot) When it comes to writing history, you can't beat the Democrats. Witness the smooth way they're taking credit for this year's roaring economy and even using it to rehabilitate their 1993 tax increase. ``This is the best economy we've had in 25 years in this country, and again I think a lot of it goes back to the budget passed by all Democrats in 1993,'' House Democratic leader Dick Gephardt says--every chance he gets. President Clinton, no slouch at spin, says every other day or so that ``Some fine members of Congress lost their seats because they had the courage to change course and vote for the future. But just look at the results. Today our confidence has returned, and our economy leads the world.'' By ``fine members'' he doesn't mean Republicans. This is clever, as revisionist history usually is. If only it were true. Since prosperity is today's dominant political fact, it'd be nice to draw the proper lessons. An accurate reading of recent economic history would give Mr. Clinton some credit, while handing at least as much to a Republican Federal Reserve and Congress. Recall the logic Democrats used to justify their tax increase in 1993: It was needed to lower the budget deficit in order to lower interest rates in order to spur the economy. Treasury Secretary Bob Rubin's Bible was the bond market, which sets interest rates for everything from credit cards to mortgages. And for a while after Mr. Clinton's 1992 election, bond yields and interest rates did fall. The 30-year Treasury bond, probably the best political barometer, fell from 7.61 percent to 5.94 percent by October 1993. Mr. Rubin crowed in vindication. But then came the market's revenge, starting about the time the White House proposed to nationalize 14 percent of the U.S. economy: Interest rates shot back up, to a peak above 8 percent on the very day Republicans won control of Congress. Mr. Rubin wasn't crowing any more. Guess what happened next? Interest rates began falling again after the 1994 election, to an average monthly low of 6.06 percent by the December 1995 budget standoff. They've since bounced around between 6 percent and slightly above 7 percent. In short, interest rates fell further and faster with a Republican Congress that was trying to cut taxes than they did with a Democratic Congress that raised taxes. By Bond Market Bob Rubin's own standard, the 1993 budget deal counted for less than did GOP plans to constrain the government. The four year history of stock prices is also revealing. When Mr. Clinton won election, the Dow Jones Industrial Average stood at 3223, an early stage in the economic recovery. The Dow rose modestly, to 3830, in the president's first two years. But when Republicans took Congress, stocks began to take off. By February 1996 the Dow was at 5600, where it bounced around until voters affirmed divided government last November. Then it soared again, closing this week above 7500 for the first time. Financial markets aren't the entire economy, but they often anticipate growth. And sure enough, the pace of this expansion has followed the market pattern. Growth was a mediocre 2.3 percent in 1993, dampened by the disincentives of the tax hike. The economy gained speed as the shadow of ClintonCare faded and has really taken off since the beginning of this year. The point here isn't to deny Mr. Clinton his rightful credit. He gets full marks for leaving Republican Alan Greenspan alone to run the Fed, and for reappointing him. Just as vital, he resisted his own party's lurch toward protectionism. Even if NAFTA and GATT were started under Republicans, maybe only a Democrat could have seen them through a Democratic Congress. But for Democrats and their acolytes to portray the last four years as a single, unbroken policy string is laughable. Free trade and the Greenspan Fed have been the only constants. The rest of Clintonomics went over the side when the Republicans took Congress. Clinton I had tax hikes, new ``stimulus'' spending, Hillary's fantasia and a wave of new regulation. Clinton II features a balanced budget, tax cuts, legal reform and regulatory review, all forced on him by a GOP Congress. With typical brass, Mr. Clinton spins this political necessity into his own virtue. In a larger sense, today's good times have roots that predate all of today's politicians. That's one point in a provocative article, ``The Long Boom,'' in the July issue of Wired magazine. Peter Schwartz and Peter Leyden fix the start of what they call our new era of prosperity around 1980, with the coming of Margaret Thatcher and Ronald Reagan, who ``begin putting together the formula that eventually leads toward the new economy.'' Their main hero is technology, unleashed in part by the breakup of the AT&T monopoly. Wayne Angell, the former Fed governor now at Bear Stearns, goes even further back to Taft-Hartley, which passed over Truman's veto. That law gave the U.S. enough labor flexibility to avoid the unemployment morass now ruining Europe's welfare states. It's not surprising Democrats would ignore all this and claim credit themselves. That's politics. They figure they might take Congress in 1998 if they can claim today's good times as their own. What's amazing is that Republicans are letting them get away with it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, on rollcall No. 202, House Joint Resolution 54, I was giving testimony before the Commodity Futures Trading Commission. I arrived in the Chamber too late for any vote to be counted. I am a cosponsor of this bill and had I been present, I would have voted ``yes.''

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Let me give Members my ideas why the President does not like the provision in the disaster relief bill that would continue Government operations at 100 percent of the previous year's level if for some reason an appropriation was not passed into law. It is because if the President passes that provision, he feels he cannot force Congress to put in those increases in appropriation bills that he would like to have. He found out in the last 2 years that he can win in deciding how much to spend on social programs by vetoing appropriation bills and close down Government. He has learned and he thinks he knows that with the help of the liberal press he can spin this politically so he can demand any spending he wants out of Congress in those appropriation bills and simply say, ``If you don't put in those appropriation bills that I, the President, want, then I'm going to veto it and any government close-down is going to be the Republicans fault. If worse comes to worse, it is reasonable to keep Government open and operating at 100 percent of the previous year's level, and not let the President of the United States take over the spending responsibility of the legislative branch and dictate to Congress what is going to be in those appropriation bills.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, on rollcall No. 167, I was seconds late to cast my vote. Had I been present, I would have voted ``no.'' personal explanation

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I wanted to take a moment from our legislative business to recognize and commemorate the end of a tour of duty for our 1996-97 House pages. This year, 61 young men and women from across America took time away from their families and friends to come to Washington and perform a time-honored public service. The tasks of a House page are not always glamorous, but are nonetheless necessary and valuable. They serve as messengers and aides. They learn about the workings of Government and observe history being made. In fact, I believe some of my colleagues in this House once had the honor of serving in the page program. I wish I could take the time to name all of our pages, but allow me to at least make mention of those in our Michigan delegation: Ryan Hemker, Virginia Cloutier, Antonia Henry, Paul Soderberg, and Aric Nesbitt. I have had the privilege of sponsoring one of these fine pages: Ryan Hemker of Coldwater, MI. Ryan, a top student at Quincy High School, has demonstrated all of the characteristics we have come to expect from our pages. He is industrious, intelligent, and a true leader in the page program. It was my privilege to have the opportunity to get to know him and the other pages in this year's program. Now, as their term as pages comes to a close, I wanted to salute these young people for their efforts, their dedication, and their enthusiasm to serve the Members of this, the people's House. I am confident that their contributions here will be long remembered and that they will distinguish themselves in their communities just as they have here in Washington. To all of our pages, I offer my best wishes and thanks.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, if a Member could respond from the other side briefly, I am very concerned about this because what we are adopting is a sense of Congress passed by the Senate. And in section 321(2), it says that if revenue starts going down after the year 2007, will increase taxes. Most of the speakers over there say, look, we want a tax cut, we do want it to go to the American working family. But (2), the gentleman from South Carolina [Mr. Spratt] says, after 2007, if revenues start going down, increase taxes. That is not what we want. And I do not think we should accept that idea that somehow if there is a slump in the economy, what we do and how we instruct conferees is to increase taxes so that they do not have any revenue loss after the year 2007.

Mr. SMITH of Michigan. Just in response, Mr. Speaker, I would hope we all keep track of some of our goals in this country and what I assume we all want to accomplish, and one thing is more and better jobs. So the question, as we review tax cuts, is how do we get more and better jobs and keep this economy growing? So to specify and say that the tax cuts have to be just to a certain income group, I think dismisses the larger question of how can we best accomplish the goals that we all want to achieve, and that is more and better jobs for the American working family.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, you know we are at the starting gate of a new era, I think, in the U.S. Congress of trying to look at what is reasonable and what is practical on the way we pay/spend taxpayers' dollars. We have just finished a debate and both sides have agreed that somehow Government is taking too much of the hard-earned money out of working families' pockets, so we are in a new attitude saying that too big a Government and too much taxes is bad for the people and it is bad for the economy. I think as we look over some of the weaknesses of this budget agreement, I suspect a couple of the areas that I would put at the top of the list are the way we have dealt and tried to figure out solutions for the reduction in spending of entitlement programs. Entitlement programs next year will use up 53 percent of the total Federal budget, and you know for a Congress that was developed and given the responsibility of not only deciding how much money was going to be spent and how it would be spent to evolve in today's situation where Congress really only has control of about 17 percent of the budget; if you consider that the 17 percent that goes into defense spending is almost on automatic pilot, because there is seldom a disagreement of more than a plus or minus 10 percent deviation between the hawks and the doves and the Republicans and the Democrats, we are left with discretionary spending that represents just under 17 percent of the Federal budget. Entitlement programs I think can be defined as anybody that is eligible for that money will automatically be paid those sums. Of course, the large spending items are Social Security taking 23 percent of the Federal budget now, Medicare, Medicaid, the welfare programs, the food stamp programs, the agricultural programs; all on automatic pilot, if you will, that Congress has lost control of and a majority in Congress can no longer adjust those spendings without the consent of the President. You know, I think a lot of people misunderstood what happened 2 years ago when Republicans said that we are going to take this discretionary spending and use it as leverage to try to change and slow down some of the increases in discretionary spending. Now, the Government closed down first 2 days, and then in December 1995, 3 days, and then it came to March 1996, last year, and Republicans said, look, we are going to draw a line in the sand and we are not going to pass this discretionary spending bill that in effect runs the Federal Government unless the President agrees to submit a balanced budget. The President though, does whatever he does to make those decisions, decided, yes, I am going to do that. Now the whole world of Congress has changed, and everybody is saying yes, we want to balance the budget. I mean that is the good news, that is the great news, and now we are saying let us let people keep some of that hard-earned money in their pockets and start reducing taxes. That means reducing the size of this overwhelming huge Government that is now out of control.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman for yielding to me. We all should continue to be concerned about the debt of the Federal Government. We continue to increase the debt subject to the debt limit, and I would just remind Members that in 1979, when we started the so- called rule 49, the Gephardt rule, that says we are automatically going to increase the debt when we pass the budget resolution, at that time we had a debt of $829 billion, which was 33 percent of GDP, of gross domestic product. Today the debt is $5.2 trillion, almost 70 percent of GDP. When we brag about being the shining knight on the white horse that is bringing the deficit down, I would just like to call to the attention of my colleagues what has really brought the deficit down. We had huge tax increases in 1990 and again in 1993, but an economic system that surged ahead. Our free enterprise capitalistic system continued to expand revenues while spending continued to increase faster than inflation. But in the process, the deficit has gone down. This budget proposal, I would have written to have tax decreases that spur economic growth and job creation more than we do in this proposal. But I thank the committee for including in this proposal the waiving of rule 49, the so-called Gephardt rule, so that we can have an up or down vote on the debt limit that is so important to our economic future. I thank the Rules Committee for supporting my House Resolution 30 at least temporarily dispensing with rule 49 in this rule. Now House rule 49 will not apply to the spending in this budget resolution. House rule 49, the so-called Gephardt rule was passed in 1979 in order to allow Members to avoid a separate embarrassing vote to raise the debt ceiling. During the debate, those in favor of the Gephardt rule argued that spending determined the need for borrowing and therefore a separate vote was not needed. Opponents, however, argued that a separate vote on the debt ceiling was still needed because it was the only time the House took to reflect on the increasing national debt and its impact on future generations. Since the imposition of the Gephardt rule, the debt has increased. The arguments against the rule are stronger than ever because of the increasing national debt. ------------------------------------------------------------------------ Debt as percentage Fiscal year Gross Federal debt of GDP ------------------------------------------------------------------------ 1979........................... $829.47 billion.... 33.2 percent 1996........................... 5.182 trillion..... 69.2 percent ------------------------------------------------------------------------ The Gephardt rule treats Congress' constitutional power to borrow as intermixed with its power to spend. This violates the spirit of the constitution which lists these powers as separate and distinct. As a result of the Gephardt rule, Federal borrowing is no longer seen as an emergency power for times of depression or war, but just another, natural part of the Federal budget process.