Nick Smith

Mr. SMITH of Michigan

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

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I entered earlier today into the extension of remarks a tribute to one of Michigan's heroes in Iwo Jima. I rise on this 5-minute special order to remind my colleagues of the economic danger that faces our country if we do not take some action to encourage capital investment in America. Expensing and neutral cost recovery is the only proposal in the Contract With America that specifically encourages businesses to purchase machinery and equipment and facilities. The problem that was brought to my attention today is an article in the National Review dated February 20. I hope my colleagues will take time to read the article entitled: Missing the Point. In summation, I read from the article. It says: ``Living standards of American workers rise or fall with the amount of capital their employers are able to invest in them.'' In 1990, the average American manufacturing worker was supported by $98,598 worth of machinery, structures and other capital, according to the Department of Commerce. Service industries invested just $21,495 per worker. Recent research traces the stagnation in real wages to slower growth in capital investment per worker, and the danger of what is happening in this country is that the rest of the world is acting very aggressively to do everything they can to attract our capital investment. They are changing their tax laws, they are taxing their businesses less. Over the long haul, worker productivity, GDP per worker, is vital because it determines growth in the wages and living standards. Let me give a little historical outlook on this. From 1950 to the early 1970's average annual productivity growth of 2.3 percent per year helped America advance and raised our standard of living above everybody else in the world, but since 1975 we have slowed to a crawl, 0.8 percent per annum, while worker productivity in Europe and Japan has expanded more than twice the rate of what we have expanded in the United States. If we compare the United States with the rest of the world, we save less of our take-home dollar, we invest less per worker in machinery and equipment and, not surprisingly, our increase in productivity is also at the bottom of the list of the industrialized world. Neutral cost recovery, indexes depreciation schedules for inflation. Under our tax code businesses have to wait 5, 10, 15, 20 years before they are allowed to deduct from their income those investments in machinery and equipment. We make them depreciate it over that period of time while inflation eats up the value of that depreciation. I sponsored the neutral cost recovery bill last year with 90 bipartisan cosponsors. This year I reintroduced the bill, H.R. 199, and this proposal has been endorsed by leading business organizations, the U.S. Chamber of Commerce, the National Federation of Independent Businesses, National Business Owners Association, and others because they appreciate the fact that capital formation is the key to economic success and maintaining and improving our standard of living in this country. Under this neutral cost recovery bill, businesses would be allowed to expense or deduct in the first year of purchase, $25,000. Neutral cost recovery or indexing the outyear depreciation for inflation in the time value of money would be applied to those outyears in the depreciation schedule. I conclude, Mr. Speaker, by suggesting that we need not put our businesses at an economic disadvantage with the rest of the world. We need to change our tax laws, we need to encourage capital formation and the investment in machinery and equipment that increase the efficiency, and ultimately the productivity, and finally the competitive position of this country.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, 50 years ago a small group of marines raised a flag on a faraway island in the Pacific Ocean: Iwo Jima. The scene was immortalized for all Americans in the famous photo and memorial statue near Arlington Cemetery. The battle for Iwo Jima paved the way to victory over Japan. It was not without cost; 6,000 Marines were killed. Pvt. William Henry Haddix was one of these who made the supreme sacrifice of his life. A lad of just 22 when he died, Bill left behind a young wife and two small children. He also left behind a beautiful and precious legacy. Just days before he died he had written his wife and family. Private Haddix's daughter-- Susan Haddix Harrison from Jackson, MI--has generously shared his deeply moving and meaningful letter with me. The letter includes a poem by Private Haddix about his experience on Iwo Jima. Interwoven in the fabric of the words are the golden threads of faith in God and duty to country. Iwo Jima I have landed on an island In the Pacific salty air where heat, rain, mud and bugs are an everyday affair. The nights are long and dreary as the pale moon lights the sky, and I lie awake a thinking as the hours creep slowly by. Where men must go on fighting for land that must be won In dirt, grit, slime and sweat beneath the burning sun. I can't help but dream of home and the ones I love so dear, It makes a man cuss the day he ever landed here. All luxuries are forgotten In this land so far away and it takes a lot of guts for the guy who has to stay. I pray for you my darling every single night and know God will care for you because you're living right. When we meet our enemy be it day or night It's do or die for that poor guy for we fight with all our might. Should I ever receive a call from God I know darn good and well, That I'm bound to go to heaven for I've served my time in Hell. William H. Haddix, Private, 28th Replacement Draft, Co. B, 3rd Marine Division. Private Haddix did not ask that he may live. He was prepared to die if need be. All he asked is that he may be ready if he was called. And he asked that his sacrifice may not be in vain. Today, we salute Private Haddix and all the men of honor and courage who fought beside him five decades ago. We should always remember their bravery, their honor, and their dedication to our Nation. Our most precious inheritance is freedom, but we should remember that it was not free to those who earned it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentlewoman for yielding to me. The Kellogg Foundation in Battle Creek, MI, the director is leaving, Russ Mauby. I would like to acknowledge him. There are Kellogg farmers in the gallery today, and I would just like to say we appreciate them being there.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, in the first week of January the U.S. House of Representatives got rid of 3 standing committees, 25 subcommittees; we fired 682 congressional bureaucrats, and we totally reformed the procedures of the House of Representatives in addition to passing a bill that would make the Members of Congress live under the same laws and rules that we make everybody else in our society live under. A couple of weeks ago we passed a balanced budget amendment. Week before last we passed legislation to keep the Federal Government from imposing unfunded mandates on the States. Last Monday, on Ronald Reagan's birthday, we passed the line-item veto. For conservatives across America, it is beginning to sink in: We won the election last November 8. I think Republicans now have a great opportunity, but make no mistake, the responsibilities that come with victory are much greater than the responsibilities that come with defeat. It seems to me we are now at a crossroads where we can change from being a nation at risk to being a nation with a hopeful future. I do hope all Americans realize they are part of a historic group, they are in a historic time as we try to revolutionize the Federal Government's role in our lives. Thirty-three years ago, when I got out of the Air Force and I bought my farm and I joined the local Hillsdale County Republican Party in Michigan, I was concerned because I was faced with a Federal Government that was telling me how many acres of different crops that I had to plant on my farm. It seemed important that I try to tell the Federal Government that if they want efficient farming, they cannot pass those kinds of mandates, not only on farmers but on all businesses of this country. I think we all should be energized and excited to have this historic opportunity to bring about what many of us have been fighting for for many years, that is a leaner, more efficient Government, lower taxes, and stronger family values with more control and responsibility over our own lives. But we can assume it is automatically going to happen. The forces of big government liberalism are stunned and in retreat, but they are not defeated. To make the spending cuts necessary to stop mortgaging our children's future will be very difficult. We are going to have to say ``no'' to the special interest groups and the lobbyists who fight for their pet projects. It would seem to me that if we really wanted to look out for the future of this country and for future generations, we Republicans and Democrats and the President's people would get in a room and we would kick out the pollsters and the specialists of the special-interest lobbying groups and we would make the kind of tough decisions that we know must be made if we are going to cut down the overspending and over-regulation of this Government. By cutting some of the programs we can no longer afford, even some of the good ones, Americans will have to make tough sacrifices. But one lesson we have learned over the last 40 years is that, if we do not have the energy, and ability and willingness to do it today, it is not going to be done. I, for one, am willing to say no to that additional spending. The time for talking is over. I think the American people will no longer tolerate excuses from Government, and I am giving this speech today because I am already seeing some traditionally conservative Members of this Chamber, even some Republicans, that are talking about backing away from the tough spending cuts. For this Chamber, for this Congress, to be successful, people all over America are going to have to do two things, I think. They are going to have to be willing for Government to do less for them, and they are going to have to be active in helping explain how serious this problem really is. In conclusion let me challenge you, Mr. Speaker, and the Members of this body with a few statistics: The interest on the Federal debt this year will be $339 billion. That is more money than we take in, as my colleagues know, in total--one quarter, 25 percent of all the total revenues coming into this national Federal Government will be used, utilized, in paying the interest on the Federal debt. We are mortgaging our children's future, and I hope we will all be industrious and energetic in trying to make the tough spending cuts that we are going to be faced with.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, Members of Congress were given the President's budget today, and once we look at that budget, I hope every Member, Republican and Democrat, as well as the American people, will be as upset as I am as I have gone through this budget. Here is what I see: Spending every year goes up faster than inflation. Even the so-called reductions are gimmick accounting. They are not truly reductions. Let me tell the Members what happens to the national debt. At the end of 1994, the national public debt of this country was $4.6 trillion. This budget, by the year 2000, increases the debt to $6.67 trillion, from $4.6 to $6.67 trillion in this 5-year period. Ladies and gentlemen, the interest on the public debt this year is going to be $339 billion. That is 25 percent of all revenues coming into the Federal Government. We have to do it better. Let us do it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I support a balanced budget amendment but suggest that a provision to limit Federal spending to the growth of the economy is also desirable. The problem of Federal deficits is simply a symptom of the larger problem of massive growth in the Federal Government. James Buchanan and Richard Wagner discussed what happens when the populace begins to believe that the Federal Government need not practice fiscal restraint. Their 1997 book ``Democracy in Deficit''--published before the era of $200 billion a year budget deficits--describes how this opens the door to ever-increasing deficits, which are then monetized by the Federal Reserve, leading to continuous reduction in the value of the balanced budget amendment. While such an amendment sounded somewhat radical sixteen years ago, it sounds almost mainstream today. I suggest, however, that instead of a balanced budget amendment, we apply to the Federal Government a variant of what Michigan applied to its State government in 1978 when it adopted the Headlee amendment to the State constitution. The basic components of the Headlee amendment are: First a limit on the size of State government achieved by holding state revenue to the same fraction of personal income that it was when the amendment passed in 1978; second, a requirement that the state maintain its proportional share of spending to local government and reimburse local units for any mandates imposed by the State; and third, a provision requiring a vote of the local populace for any increase in local taxes. The purpose of the second provision was to prevent the State government from avoiding the limitations on its growth imposed by the first provision by shedding its financial support of the local units and requiring them to provide services and programs that the state was unable or unwilling to pay for. A blue ribbon commission appointed by Governor John Engler to study the Headlee amendment recently concluded that the Headlee amendment had been effective in limiting the growth of State government. In order to keep the requirement of a balanced budget from resulting in massive tax increases and a deterioration of the economy, my suggestion is to limit the growth of federal spending by setting a limit on the amount of Federal outlays relative to gross domestic product [GDP]. This would cap Federal outlays at the percentage of GDP consumed at the time of submission of the amendment to the states. Federal outlays could never, in any year, exceed the growth of GDP. In this way, if outlays were less than the ratio in one year, there would be a permanent reduction in the ratio of Government spending to GDP. The Federal Government could not mandate that the States provide any service that they are not already providing, unless it fully funded the mandate. Combining this with a phased-in balanced budget requirement would result in attacking the real problem--the growth in Federal outlays over time, whether this growth is funded by taxes, borrowing, or inflation of the currency. Of course, there are details, and as they say, ``the devil's in the details.'' An emergency provision to allow deviations from the limits during time of war is an example. The definition of federal outlays, which would appear to work at this time, will no doubt be strained over time. However, it is probably easier to set standards regarding outlays than debt, considering the pitfalls to defining debt that your editorial pointed out. There are at least three reasons why a provision to limit spending should be part of a balanced budget amendment. First, it is a moderate proposal. It does not require a reduction in the absolute size of the Federal Government, but only that the Federal Government not get larger relative to the size of the economy. Second, it has been tried at the State level and appears to have accomplished its basic purpose. Third, it gets directly at the problem of growth of the Leviathan rather then trying to get around it indirectly by limiting how much the Government can borrow and then hoping that political pressure against taxes will restrain Government growth.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, as we conclude another football season, I say: Move over, San Francisco. Step aside, San Diego Chargers. The real football champion is not from California, but from Michigan--and more specifically, from Albion, MI. Last month, Albion College captured the division III national championship by defeating Washington and Jefferson of Pennsylvania 38 to 15. With a tradition of excellence in both academics and athletics, Albion's reputation is known throughout the Midwest. And the men who make up the Briton football team are scholar-athletes in the truest sense of the word. [[Page H371]] So, let me take my hat off to Coach Schmidt and the Albion Britons for capping a perfect 13 and 0 season with a national championship. On behalf of this Congress, congratulations Albion. I enclose a report of the game as covered in the Pleiad: Washington and Jefferson was the 2-1 favorite to win the Amos Alonzo Stagg Bowl. In the end, the margin of victory was more than 2-1. Only it was Albion College that became the National Collegiate Athletic Association Division III National Champions. So much for expert opinions. The Britons' 38-15 victory over the Presidents was the most lopsided Stagg Bowl since 1986. The victory boosted Albion's record to 13-0, clinching a perfect season. The Britons are one of four NCAA football squads in the nation with a perfect record . W&J finished its season with an 11-2 record. Despite the clearcut victory, Saturday's game in Salem, Va., was marred by a slow start and racial taunts directed at Jeffrey Robinson, Mount Clemens senior and running back. First, the Britons lost the coin toss and had to receive in the first half. Despite a 40-yard kickoff return by Todd Morris, Highland senior and fullback, Albion was unable to capitalize on its first two drives of the game. With 4:30 left in the first quarter, W&J's Vince Botti scored the game's first touchdown. With 35 seconds left in the first quarter, however, Robinson broke a tackle and found a hole. He ran for 70 yards, scoring the Britons' first touchdown 12 seconds later. Seventy-four seconds after that first touchdown, the Britons scored again when Jared Wood, Frankenmuth junior and outside linebacker, intercepted a pass and ran it back 29 yards for another touchdown--the first of two in the second quarter. Scott Casteele, Vermontville senior and tight end, forced the Presidents to fumble on the ensuing kickoff. David Lefere, Jackson sophomore and free safety, then recovered the ball, leading to a 28-yard field goal by kicker Michael Zacha, Okemos sophomore. The defense dominated, with big hits by Dennis Waclawski, Ada junior and defensive tackle; Robert Taylor, Grosse Ile senior and defensive end; and an interception by Timothy Schafer, Holt junior and cornerback. With 1:08 left in the half, Robinson scored again, putting the Britons ahead 24-7 at the half. The third quarter was dominated by the Briton defense, especially by James Davis, Gross Ile senior and outside linebacker. Davis had a hand in two sacks in the quarter, both on W&J third downs. Albion added to its score yet again with 50 seconds left in the quarter, courtesy of a 2-yard reception by Christopher Barnett, Flint sophomore and wide receiver. The fourth quarter belonged to Raymond Henke, Warren sophomore and cornerback, who batted down three W&J passes. With 11:18 remaining, W&J running back Jake Williams crossed the goal line for a 12-yard touchdown run. W&J chose to go for the two-point conversion, and quarterback Jason Baer connected with Botti, bringing the score to 31-15. With 57 seconds left to play, Robinson scored his third touchdown of the game--a 29-yard run. With the successful extra point kick by Zacha, the Britons clinched the national championship by a score of 38-15. Albion's score was not the only impressive number of the game. Robinson rushed for 166 yards and three touchdowns. The team combined to rush for 254 yards, shutting down the Presidents' first-ranked defense against the run, which only allowed an average of 35.8 rushing yards per game. Prior to Saturday's game, W&J had not given up more than 24 points since a 47-28 loss to Ithaca (N.Y.) in 1992. The Britons accomplished all this despite the steady rain that persisted throughout the game, making the 45-degree temperature seem even colder and making the field even muddier. With a tradition of excellence in both academics and athletics, Albion's reputation is known throughout the Midwest. The men who make up the Briton football team are scholar athletes in the truest tradition of the word, so let me take my hat off to Coach Smith and to the Albion Britons for capturing a perfect 13-1-0 loss season with the conclusion of the national championship. On behalf of this Congress, congratulations, Albion.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, the previous chairman of the Committee on the Budget, the gentleman from Minnesota [Mr. Sabo], has indicated correctly that this is a good start, and the gentleman from Ohio [Mr. Kasich] has indicated he is going to introduce the bill that is going to go all the way. This is not truth in budgeting, but at least it is truth in the way we report the budget to the American people, not pretending that there is a deficit reduction when actually there is a spending increase. Ultimately, we are going to get our bill that this House passed through the Senate, and it is going to become law. That is the ultimate goal of this first step.