Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Kingston, what I learned is I am not a better number drawer when I have extra time than I am with short time. All this says is that the only budget that--and I do not want to be partisan, but that the President has sent the Congress is figured in the same way as the Republicans are figuring their budget as far as deficits. These are the deficits that are going to exist under the President's budget that he sent us about 8 weeks ago, and the Republican budget passed out of the House, very similar to the one passed out of the Senate. In year 1996, the deficit under the President's plan is $211 billion, $156 for the Republican. Every year you see our deficit keeps going down and down. We are trying to brag about it. We are saying for the first time since 1969, the end figure is zero as far as the deficit. The zero at the end is the fact we are balancing revenues with expenses. The projection down here for the President is going up on the deficit in those out years.

Mr. SMITH of Michigan. We are actually starting to pay back some of this huge, gigantic, $6 trillion debt that the kids and grandkids are going to owe at that time if we do not change.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I just came over because I was hearing some of the comments. What concerns me very, very much is what is happening from the Democrats while Republicans have designed a budget that will balance in the year 2002. Everybody, I would hope, thinks that there is some good in achieving a zero deficit, balancing our budget and not spending any more than we take in. Yet the other side of the aisle, and I usually am not partisan on these things, have seen this as an opportunity to criticize every one of these cuts that the Republicans are making, without presenting to us their idea of where we should be. If you just look at what the President sent over here as far as his budget, his deficit spending, his spending more than what we are taking in in the year 1996 is 211, Republicans 156; in the last year, 2002, the Republicans' proposal is down to zero, zero deficit. We are living within the budget, within the revenues that we are taking into this Government. The President is 318. Mr. Speaker, the other side should not criticize. They should be forthright cuts if we are going to achieve a balanced budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. It is interesting to note that when CBO comes up with their cost figures, when we have anything to stimulate the economy and job growth, they do not take that into consideration in deciding how much it is going to cost. So if it is a tax decrease, regardless of how business and industry and jobs react to that to bring in ultimately more revenues, they consider it flat. It is a nondynamic scoring. But you are so correct, if something we do encourages businesses to be a little more competitive and to allow them to expand, then it is going to bring in so much more revenues to totally offset everything and balance our budget much quicker.

Mr. SMITH of Michigan. You are such an excellent person to have a colloquy with because you know all the statistics and all the figures.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, on May 7, Cascades Baptist Church will be celebrating its centennial with special services and an open house during the afternoon. The church, originally called Memorial Baptist, was founded in 1895 as a mission work of First Baptist Church in Jackson. The church changed its name in 1959 when it moved to its present location at Bowen and High Streets. Now, one hundred years after its founding, Cascades Baptist is taking a look back over one hundred years of service within the community. The roots of the church really go back as far as 1882, when a Sunday School was begun in the Griswold Park School by a member of the First Baptist Church. In May of 1882, it was formally made a mission of First Baptist Church under then Pastor L. Kirtley. It was called the Summitville Mission first, then the Butterfield Mission in memoray of Rev. Isaac Butterfield of First Baptist. In 1892, a weekly prayer meeting and Sunday afternoon preaching service began, and in 1895, the cornerstone was laid for the new building on a lot next to the school, right on the northwest corner of Griswold and Third Street. This ceremony was the second of the day for the First the cornerstone for another mission work, the East Main Street Baptist Church, now the Loomis Park Baptist Church. The new church faced an early disaster when their building burned in May of 1897. The made the decision to rebuild, and also to become an independent church the same year. In August of that year, they organized with a membership of 34, and laid the foundation for their new building in October. When finished at the end of that year, the new church had taken the name Memorial Baptist. The church prospered in the years leading up to World War I. During the war, when the school required more property, the church sold its property to the school and moved their church and parsonage both across the road to their present location, at the southeast corner of Griswold and Third. The building was greatly expanded in 1934 with an addition to the east that increased the seating capacity to 249 in the upstairs auditorium. In 1930, the church had begun regular broadcasts on WIBM (then 1370 kHz) that continued periodically up through 1959. As the church continued to grow, the facilities became much too small in the 1950's. The church decided to build a new facility to accommodate the needs. Accordingly, in 1954, lots were purchased at the corner of High and Bowen, ground was broken in 1955, and a new building completed in 1959. When the church moved in October 1959, the name was changed to Cascaded Baptist Church. The building was built for a cost of $165,000, though valued at $250,000. Volunteer work had greatly helped reduce costs. The mortgage was burned in November 1964. Later, in 1978 under Paster A.R. Gould, the church underwent a major redecorating on the inside to give it the present warm and attractive interior. Also during Rev. Gould's ministry, the church undertook the ministry of Jackson Baptist Schools, which has grown greatly to a present enrollment of over 375 students. Recently, under present paster, Rev. Berry Jones, the church has added a gym and band facility to their high school. Though valued at nearly a million dollars, the building cost much less due to volunteer labor, and the construction was paid for almost entirely in cash. Mr. Speaker, I am proud to salute the Cascades Baptist Church as it celebrates a century of caring. This honor is a testament to the past members and those today whose personal interest, strong support, and active participation contributed to this accomplishment. Their future is God's work and I wish them continued success.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, Gilbert and Sullivan once said in one of their operas ``Things are seldom what they seem.'' We have been talking a lot about the protests, and that maybe the tax cuts are unfairly divided between rich and poor. I think it is important that we remind ourselves what is in this legislation. In this legislation what we are going to be voting on is $100 billion of spending cuts. That is $23 billion out of discarding needless bureaucracy, $24 billion cut in the area of eliminating duplication and waste, $10,900,000,000 cut from foreign aid, $7,500,000,000 attacking corporate welfare, $22 billion in setting empowerment, and an $11 billion spending cut. Also what this bill does, it says none of these tax reductions take effect until we cut an estimated another $400 billion in spending and get on that glide path toward a balanced budget, which is our goal.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, this bill does two things. It cuts spending and it cuts taxes. I think we need to ask ourselves the question, what is going to make our communities in this country a better place to live and work and raise our kids? No. 1, it is to leave some of that hard-earned money in the pockets of the people that made it rather than give it to the Federal Government. A lot of discussion about who gets the advantages. If you happen to be a family that makes less than $25,000, you get a 100 percent tax break. You pay zero. If you are making $30,000, you get 48 percent of your taxes reduced. You see the declining balance? If you make over $200,000, you only get a 2-percent reduction in your taxes. The other thing is spending cuts. We have built over the last 40 years a $5 trillion debt that we are passing onto our kids and our grandkids. This starts to cut spending. I know some of those programs are good. So it is easy for the other side to say, do not cut this program, do not cut this program. Well, if we care about spending, if we care about our future, if we care about the $339 billion interest that we are going to be paying this year, one quarter of all revenues coming into the government, we have got to cut spending. This bill does it.

Mr. SMITH of Michigan. Mr. Chairman, I thank the gentlewoman for yielding. Mr. Chairman, I am so excited that we are reducing part of the taxes, reducing $190 billion of taxes, to help offset the $250 billion tax increase that we had a year and a half ago, and we are doing it in such a way as to expand and encourage jobs in this country. Let me just briefly show you this chart of how the United States charges our businesses that buy that machinery and equipment. Our marginal tax rate is 28 percent compared to France, 18 percent; Germany is exempt. We are penalizing our businesses that buy those tools and put the best tools in the hands of our workers. If we give American workers those kinds of tools and those kinds of facilities, we can out produce anybody in the world. Mr. Chairman, that is what makes jobs. We produce a product that people in this country and all over the world want to buy, and we produce it at a competitive price. To do that, we have got to give our workers the best possible tools.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. I yield to the gentleman from New Jersey.

Mr. SMITH of Michigan. Mr. Speaker, just to continue with those charts, the first chart, this is the tax cut for working-class families. For those families earning less than $25 thousand, there is 100 percent tax cut. For those families earning less than $30,000, a 48 percent tax cut. For those less than $45,000 a 21 percent tax cut. You see the tax cut continues to go way down. Those families with over a $200,000 income only have a 2-percent tax cut. So it must be tremendously frustrating for people to look at one side of the aisle and then the other side of the aisle as we go through these charts. But if you look at what is going to happen in terms of the tax day. You know, the tax day is how much of the year you have to work so that work and that effort goes to the Federal Government to pay taxes. Currently, it is June 4. Under the budget proposal that was submitted by this president, that tax day increases to June 7. Under this tax proposal that we are going to be considering for the next 2 should be earlier than May 26. There has been suggestions that the tax breaks go to big business. With all due respect, I suggest to you, Mr. Speaker, that taxes placed on business are passed on in the price of their products. Right now between the regulations and the taxes that we charge business, they are paying every year $750 billion. That is twice the amount that you are paying on increased costs of the goods and services you buy compared to what you spend in your tax bill. It is bad enough, in the next couple weeks, as you sit down and figures out your tax bill of what you have to pay this Federal Government to operate its huge, overzealous, overbloated government, but just think for a minute the price, increased price that you pay for the products in this country because of the regulations that cost $500 billion a year to that business that they pass on to you in increased costs of their products, to the additional $250 billion that we change those businesses in taxes. If they are not successful in passing it onto you and I, the consumers of this country, then they go out of business. So I guarantee you, they price on that product. Let me show you what we are doing to business in this country on taxes. On the far-right column, you see in the United States we charge our business on our capital gains tax rate the marginal rate is 28 percent. You compare that to France, it is 18 percent; Germany totally exempts their businesses; Japan is down to 20 percent; U.K. exempts the first 5,500 pounds and after that charges 40 percent. We are overtaxing our businesses. We are losing businesses that, No. 1, go out of business; that, No. 2, decide to go to another country to operate. We cannot continue to place our businesses at a competitive disadvantage with what other countries in the world are doing. I request my colleagues to look at this tax bill of what is good for business and jobs.

Mr. SMITH of Michigan. They increase their price of toys and toothbrushes and automobiles and everything else. The only thing that that business can do is pass on that cost.

Mr. SMITH of Michigan. It is a hidden tax.

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

Mr. SMITH of Michigan. Yes, and I think the important point is, we cannot place our businesses at a competitive disadvantage with other businesses in the world. We have got to encourage them to buy the equipment and machinery that is going to make their employees more efficient. If you put good tools in the hands of our workers, they are going to outproduce anybody on Earth. And we have got to have a tax system that encourages that action by business.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman from Pennsylvania [Mr. Fox] for yielding to me. Mr. Speaker, first let me say that it is individuals like the gentleman from Pennsylvania [Mr. John Fox], who are part of the driving force that is keeping the momentum going in this Congress to do the tough job of cutting spending and balancing the budget, and at the same time cutting taxes, so my compliments to the gentleman from Pennsylvania and my colleagues in the freshman class. I think the question we really need to address, Mr. Speaker, is what do we want, what are we after, what do we want to achieve. I think probably it is a nicer, more friendly, better place to work and to live and to raise our kids. How do we get there, I think is the next question. Part of what we need is more and better jobs in our society. Right now that is a real challenge. What we have seen over the last 40 years is a situation where we continue to increase the taxes on individuals and businesses so that government can do the things that they think are good for you. We are suggesting now that we leave more of that hard-earned money in the pockets of people that are out there working for that money, and let them decide how to spend it, instead of this huge, overbloated government bureaucracy in Washington, DC. What has happened in this country is our savings rate that used to be high, we have one of the lowest savings rates out of the industrialized world. When you add to that low savings rate the fact that the Federal Government is now overspending $300 billion a year, if you include what we are borrowing from the Social Security Trust Fund, we are overspending $300 billion a year, that in itself is negative savings, so we end up, compared to the rest of the G-7 countries, at the bottom of the totem pole on savings. That means there is less potential money out there to borrow, to lend. The Federal Government now borrows 42 percent of all the money that is lent out. Last year, out of every cent and every dollar that was borrowed, here is the Federal Government saying ``Hey, we have to have that money, because we are doing important things.'' They are borrowing 42 percent of that dollar. Somehow, Mr. Speaker, we have got to expand capital formation in this country. All economists agree that expanding capital and capital investment is the key to economic success. We have a low savings rate. The Federal Government's overspending has driven up the interest rates to businesses. What can we do to encourage productivity in this country, and allowing our businesses to be more competitive with the businesses in other countries? If you look at the way the United States taxes our business when they invest money in equipment, in machinery, in facilities, we see that our marginal tax rate is higher on our businesses than almost any other country in the world. So what we are doing is we are penalizing the business when they buy that machine or that tool or build that new facility to allow their workers to work more efficiently, because here is what has happened. Let me tell you the way it works in this country. We have a Tax Code that says that if you buy this new machinery and equipment you are going to have to spread the deduction out over the useful life of that machine or equipment or facility. That means that as we require them to spread this out over 5 or 10 or 15 or 20 or 30 years that inflation eats up the value of that deduction. So what we have in this tax bill that we are going to start discussing tomorrow is we have a provision that says, look, for small businesses, we are going to stop penalizing you for buying that machinery and equipment, and we are going to allow you to deduct that as a business expense in the year that you purchase that machinery or equipment or facility, up to $35,000. That stops the penalty. We are additionally saying for that out-year depreciation we are going to allow you to index that depreciation for inflation so inflation does not eat up the value of that deduction when you get to it. Here is what the economists say is going to happen if we pass this bill into law. It is going to reduce the cost of machinery and equipment and those facilities by 16 percent. What is going to happen if we lower the cost of new, modern, state- of-the-art tools that we can put in our workers' hands by 16 percent? I will tell you what is going to happen. Businesses are going to buy more of it. Those manufacturers that produce those tools and equipment, those builders and workers that build those facilities are going to build more of them and produce more of that machinery and equipment because now there is a higher demand for it. The economists project that if we pass neutral-cost recovery into law and if we increase the expensing from the current $17,500 up to $35,000 and if we stop the penalty of the alternative minimum tax, we are going to end up with 3 million new additional jobs by the year 2000; we are going to increase the average salary, the average wage of these individual workers all across the United States by $3,500; and we are going to expand the gross domestic product by $1 trillion. That is going to result in increased revenues coming into the Federal Government. So the point is, as we look at the rest of the countries around the world we are, in effect, treating our businesses with greater penalties when they buy this machinery and equipment. And we situation where every country now wants to develop the kind of laws, the kind of tax policies to attract capital. If you look at Adam Smith, Adam Smith says the countries that are going to progress and produce those jobs are the countries that have the kind of tax policies that attract capital formation. Ludwig Vaughn Mises in 1949, when he came to this country, he looked around and he said, ``Why is the United States moving ahead of the rest of the world?'' What he said, he said it is because we have a policy in this country of encouraging savings and encouraging capital investment. That is exactly what this tax bill does. I encourage my colleagues to sit down and figure out what can we do as a Nation to increase the number of jobs, increase the quality of jobs and, ultimately, increase the quality of life. I would suggest that one part of that situation, part of that decision, part of that conclusion has got to be treating our businesses on our Tax Code similar to what happens in other countries, treating our families similar to what other countries are doing to their families in terms of the tax obligation. If you are an average family now in the United States with at least one person working, you now pay over 40 percent of every dollar you make in taxes. So what this Contract With America is suggesting is not only do we lower taxes but we cut spending enough that we get on the glide path toward a balanced budget. That is so important. I see my colleagues on the liberal side saying, ``Don't cut taxes. Don't cut taxes.'' I would simply remind everyone that it was about a year and a half ago that we had the largest tax increase in the history of this Nation, a $250 billion tax increase. Some of us on the Republican side said, look, since the economists say that a tax increase is bad for the economy, should we be giving a tax decrease as part of our Contract With America? The overwhelming answer was yes. The next question was, how do we reduce taxes? We decided to give it to families and families with kids. We decided to give it to senior citizens. We decided to give it to businesses in such a way that they are going to expand their jobs and the employment opportunities. That is what the Contract With America said. That is what we are doing. This week we are taking up that tax bill, but I need to remind everybody that being on the glide path to a balanced budget is just as important as these tax reductions. The interest on our gross Federal debt this year is $339 billion; $339 billion is 25 percent of all revenues coming in from all sources to the U.S. Government. We have got to get on this glide path. We cannot continue saying that these are good programs, they should not be cut, we should not tamper with all of the things that the Federal Government is doing. The fact is that we have had no shortage for good ideas on good programs. We are not only cutting the fat now. We are going to move into some cuts that are going to affect all of America. It is going to be Americans that are going to have to decide, look, are we willing to sacrifice a little so that we do not leave our kids and our grandkids with this huge mortgage and this huge debt that is now $5 trillion? I thank the gentleman from Pennsylvania for yielding. I think it is so important that we have this debate, that we have this discussion, and I appreciate this opportunity, I say to the gentleman from Pennsylvania [Mr. Fox].

Mr. SMITH of Michigan. I thank the gentleman from Pennsylvania for yielding. These are two interesting charts. We talk about tax day, how long you have to work into the year to use that income to pay the Federal Government in taxes. Right now, tax day is June 4. Under the administration's proposal, we actually increase taxes; and tax day by the year 2002 goes to June 7. With this tax bill that we are about to pass tomorrow, actually tax day, because of the tax reduction, goes back to May 26. Some people say maybe that is not far enough. Maybe we should reduce taxes more. But this is a giant start. Members of Congress are not used to taking away things from people. Our political careers have sort of depended on giving more and more to people. I like to use the comparison of the Alamo and thinking that maybe one of the reasons those at the Alamo fought so hard was that there was not any back door. But in our Federal Government there is a back door, and that back door is taxing and borrowing. So we have continued to tax and we have continued to borrow to increase the propensity that we will be reelected by doing more things for more people. That has got to come to a stop if we give a hang about our kids and our grandkids. We have heard a lot of people say, ``Look, it is a tax break for the rich.'' Actually, if you look at the tax cut for working-class families, if you are a family making less than $25,000 your taxes are reduced by 100 percent. If you are a family making $30,000, your taxes are reduced by 48 percent; $45,000, they are reduced by 21 percent; $50,000, reduced by 17 percent. You see on down there, if you are a family making over $200,000, your taxes are only reduced by 2 percent. All of the economists have indicated that a tax increase is a depressant on the economy. That is where it is important that we modify the $250 billion tax increase that we had a year and a half ago and that we do it in such a way that it promotes jobs, promotes business and promotes a better life. I go back to John Kennedy, because the idea that reducing taxes was good for the economy is not a Republican idea. John Kennedy said that when he came in, he went and he reduced taxes. This chart just shows what happened product of this country in 1963 went from 4 percent, in 1964 it increased 5 percent and then in 1965 and 1966 it went on to 6 percent. The personal savings in billions went up. Business investment, which means jobs, went up. Mr. Speaker, I plead with my colleagues, I plead with the American people, let's move ahead, let's have some of these tax cuts that are going to promote and expand our business, our economy and the well- being of the American people, and let's go ahead and cut the kind of spending cuts that are needed to get us on the glide path to a balanced budget and ultimately achieve that balanced budget by 2002. These tax cuts do not go into effect until we have passed the bill that lays out and locks in how we are going to reduce spending and get to a balanced budget by the year 2002. Again I thank the gentleman from Pennsylvania [Mr. Fox] for yielding and I appreciate this opportunity.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, what I think we need to talk about is what do we do to expand more and better jobs in this country? I think we need to realize that almost every piece of legislation is a transfer of wealth, and especially appropriation bills and taxes. We have increased taxes and regulations so much on business that they are now looking to other countries for more favorable ways to raise money. I brought this chart out just to show what has been happening in our discouragement of business expansion in this country. Maximum capital gains tax rate; in the United States, it is 28 percent; France, 18 percent, exempt in Germany; Canada, 23 percent; Japan, 20 percent; the U.K. is 40 percent, but they exempt the first 5,500 pounds. Now, with that kind of tax, we are discouraging businesses from buying the machinery and equipment and facilities that are going to increase our productivity. Our productivity is not increasing at the rate of other countries. Mr. Speaker, I think it is important we support this tax bill.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I ask unanimous consent to address the House for 5 minutes.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, after we finished this week, a lot of people are going to be saying, ``This is the week that was.'' This is the week that we are talking about reducing taxes. You know, a year and a half ago this body increased taxes over the 5 years of the budget by $25 billion. Economists have come to our budget committee and said tax increases are a depressant on economic growth and job growth. So some of us thought that it would be good in the Contract With America to take away some of those giant tax increases from a year and a half ago. So the question was: How do we reduce some of those taxes in a way that is going to encourage economic growth, job growth in this country? Well, I was looking at one bill that was concerned about what the United States was doing to encourage savings and investment as opposed to other countries of the world. Mr. Speaker, that is what this chart shows. I am not sure that everybody can see the chart, but let me just briefly go through the chart that shows that, compared to the other G-7 countries, the industrialized nations of this world, the United States ranks dead last in savings, we rank last in our investment in new machinery and equipment per worker, and, not surprisingly, we rank last in the increase of productivity. So if we go to all of the economic thought that is prevailing now of what should be done to increase jobs, the suggestion is that we encourage savings and we encourage investment in that new machinery and equipment, that when it is put into the hands of those workers, it makes those workers more efficient, more productive, and ultimately increases our competitive position with the world. That is why I introduced the bill, Neutral Cost Recovery, 2 years ago, to deal with the unfairness of the way our tax code treats those businesses that buy that machinery and equipment. The legislation coming out in the tax bill that we are going to be considering for the next 3 days does essentially three things: It increases expensing. In other words, that amount of investment in capital machinery and equipment and facilities that is allowed to be deducted as an expense, as a business expense in the year of purchase, that is increased to $35,000. No. 2, that the remaining amount of that capital investment that is put on the depreciation schedule will be indexed for inflation and the time value of money. In other words, right now our Tax Code requires that you spread out toward the useful life of that property, 3, 5, 10, 15 years, that you spread out that deduction in what is called the depreciation schedule. Neutral Cost Recovery indexes what you are otherwise allowed to depreciate for inflation. The third element is something that has been very unfair to the businesses in this country; that is the alternative minimum tax. So what we do to a business, when they figure up their tax and they have not made money that year, we again making you recompute your depreciation schedule so it results in a lesser deduction.'' So, AMP is also modified in this bill. It seems if we are concerned with increasing jobs in this country and if we are concerned with raising taxes on the American people, that it is appropriate we have the discussion this week. The $189 billion over the 5 years of the budget that we are reducing taxes is small in comparison to the $250 billion that were increased, raised on the working men and women and retirees and businesses 3 years ago by this Chamber. So, Mr. Speaker, I hope everyone will tune into the discussion and decide whether or not it is going to help this country, whether it is going to allow hardworking Americans to keep some of their own money in their own pockets rather than give it to the Federal Government to spend, as we discuss, and ultimately pass this tax reduction bill this week.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, next week we will be voting on the tax cuts promised to the American people under the Contract With America. While some would argue that now is not the time to cut taxes since we must balance the Federal budget, we should realize that an increase in the growth rate of the economy would in itself reduce the deficit, since it would increase revenues and reduce welfare spending. Not all tax cuts are equal in terms of increasing the growth of the economy. Approximately 75 percent of the economic growth from our tax package comes from neutral cost recovery. Neutral cost recovery is a tax change to allow businesses to account for the wearing out of their machinery and buildings as they produce goods and services. By reducing the cost of capital 16 percent, neutral cost recovery will increase the amount of machinery, equipment, and buildings that workers use. This will, in turn, raise everyone's wages and wealth. We have known for more than 200 years that the accumulation of capital is the key to economic growth. Here is what Adam Smith had to say about the subject in his ``The Wealth of Nations'' in 1776: Every increase or dimunition of capital, therefore, naturally tends to increase or diminish the real quantity of industry, the number of productive hands, and consequently. . .the real wealth and revenue of all its inhabitants. Adam Smith was telling us that if a nation's capital increases, it will increase that nation's output of goods and services, the amount of employment, and the overall wealth and income of all of the country's inhabitants. He also explained how the real beneficiary of this process was the nation's poor. Adam Smith suggested we only need to look at the standard of living of any poor person living in a capitalist country and compare that standard of living to an upper income person in any non-capitalist economy. Would you rather be poor in the United States or rich in Uganda? In 1949 the great economist, Ludwig von Mises, wrote that the reason that Western countries are ahead of the other parts of the world is because they have a system that encourages savings and capital investment. particular the tax on capital. Over the last 20 years the United States has trailed our industrialized competitors in capital investment per worker, in part because other countries have more favorable tax policies towards capital. We are getting exactly what von Mises predicted: if you don't encourage savings and capital investment then you lose your productivity and competitive position. Today, the United States is indeed trailing its international competitors in the growth of its production per worker. Economists have estimated that neutral cost recovery will lead to the creation of 2.7 million new jobs, add an extra $3.5 trillion to our Nation's output over the next 5 years and by doing so add nearly $600 billion to Federal revenues. In passing neutral cost recovery we will secure an improved life for our children and grandchildren by leaving them with a greater stock of capital, more job opportunities, and a reduced Federal deficit. I urge my colleagues to lift the shackles that our tax code has placed on our economic growth and give our children and grandchildren the jobs that they deserve.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I move that the House do now adjourn.

Mr. SMITH of Michigan

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

Mr. SMITH of Michigan. Mr. Chairman, as my colleagues know, being in Congress is a good job by anybody's standard, the pay at $130,000 a year, good retirement benefits, good health benefits. But I ask, ``What happens when you're a career politician, and you don't have those job opportunities outside, and you want to stay with this job that you've decided is the way you want to live and raise your family?'' Mr. Chairman, I will tell my colleagues what my observation is. It is: ``You become somewhat more susceptible to those forces that might threaten that job, so, as you look at the special interest lobbyists, and when they come to you with threats and money for your next election, I would suggest that you're a little more considerate of their point of view if you think they have the opportunity to discharge you from what's a good job here in Congress.'' Career politicians that want to perpetuate themselves in office have become abusive with their power to the extent that we have jeopardized the future of this economy. Look what we have done: We have increased the Federal debt by $5 trillion. We spent $5 trillion on a welfare program of putting poor people into their own sect and making them worse off. As far as what the history is of the Founding Fathers, certainly American democracy starts with the Athenian democracy, but a lot of it comes from John Locke, the British philosopher who says government is simply a nuisance that we have to put up with to deal with some of the inconveniences. His position was that we should not have to have the kind of giant government for people to interact and deal with themselves in society, and I call to the Members' attention what happened when we reexamined the Constitution in the year 1788 and thereabouts. It was George Mason that said, ``Nothing is going to make that legislator more conscious of the decisions that he or she makes than having to return to his home community and live under the laws which he passed.''

Mr. SMITH of Michigan. Mr. Chairman, would the gentlewoman be aware the Founding Fathers were aware of term limits and actually, in the articles, there was term limits that was not enacted?